Vehicle routing problem with zone-based pricing

In this paper we study the vehicle routing problem with zone-based pricing where the transporter defines a service price for all customers in a geographical zone. Each customer accepts or rejects the transporter's offer according to a personal threshold value. Once the customer accepts the offer, the delivery service becomes compulsory. Two decisions need to be made: the price per zone and the routing to serve all customers that accept that price. The objective is to maximize the profit, which is the difference of total service revenue and the routing costs. We present a mathematical model for the problem and propose a branch-and-price algorithm. A numerical analysis shows promising results on the proposed set of instances.

Automated summary

This paper studies the vehicle routing problem with zone-based pricing, proposing a mathematical model and a branch-and-price algorithm to maximize profit by serving customers in geographical zones at personalized prices. Promising numerical analysis results are demonstrated on the proposed set of instances.