Research Article
Development of an ETD Rule for Parcel Delivery Service Considering Customer Time Requirements and Costs
Published: January 2005 · Vol. 34 No. 5 · pp. 1321-1337
Full Text
Abstract
The cargo collection and delivery methods currently employed by domestic parcel delivery service companies follow the order in which demand arises. The process of distributing and delivering cargo to destinations employs batch delivery with a focus on cost reduction, with customers' time requirements being relatively neglected. To address this issue, this study proposed an approach to improve the current parcel delivery system by applying the Expected Time Delivery rule (ETD rule). The ETD rule is a method that incorporates the Earliest Due Date (EDD) rule and cut-off time into the delivery system. Verification through a simulated parcel delivery service system demonstrated that when the ETD rule was applied, the number of parcels delivered within the time desired by customers increased. Additionally, by adjusting the cut-off time, cost increases could also be suppressed. The optimal cut-off time can be determined using the service failure cost, which can be estimated as the reciprocal of the number of successful deliveries. Since service provision costs and service failure costs have an inverse relationship, the delivery frequency at which total cost is minimized corresponds to the optimal cut-off time. The findings of this study provide the following implications. First, it is necessary to ascertain customers' desired delivery times and utilize this information in freight transportation. Second, when the ETD rule is employed, service reliability, scope, and costs can all be considered, thereby increasing customer satisfaction.
