Aggregate delivery capacity planning with a crowdsourcing option

Abstract

We consider the problem of determining an expected cost minimizing aggregate delivery capacity plan using a combination of permanent, seasonal, and crowdsourcing capacity to satisfy demand with seasonal variations. We characterize the structure of an optimal solution and perform numerical experiments to ascertain the impact of the crowdsourcing option on the delivery capacity plan. We find that crowdsourcing is a valid substitute for permanent capacity but may result in increased or decreased seasonal capacity. Further, we observe that the cost savings from utilizing the crowdsourcing option may come at the cost of lower service levels for customers, drawing into question the sustainability of the savings.