Service Area Sizing in Urban Delivery

We consider an urban instant delivery environment, e.g., meal delivery, in which customers place orders over the course of a day and are promised delivery within a short period of time after an order is placed. Deliveries are made using a fleet of vehicles, each completing one or more trips during the day. To avoid missing delivery time promises as much as possible, the provider manages demand by dynamically adjusting the size of the service area, i.e., the area in which orders can be delivered. The provider seeks to maximize the number of orders served while avoiding missed delivery time promises. We analyze several techniques to support the dynamic adjusting of the size of the service area which can be embedded in planning and execution tools that help the provider achieve its goal. Extensive computational experiments demonstrate the efficacy of the techniques and show that dynamic sizing of the service area can increase the number of orders served significantly without increasing the number of missed delivery time promises.