Approximation model to estimate joint market share in off-hour deliveries: William H. Hart Professor

Abstract

The main objective of this paper is to develop an approximation model to estimate the joint carrier–receiver response to off-hour delivery policies. The model’s main intent is to bypass the need to use more complex approaches that require expensive data for model calibration. Having access to such approximation models would make it easier for transportation agencies and metropolitan planning organizations to analyze and design off-hour deliveries programs and policies. In its first part, the paper discusses carrier–receiver interactions concerning delivery time decisions and the conditions under which both carrier and receivers would agree to off-hour deliveries. Some of the key findings are that the typical receivers would participate only if provided with a financial incentive that covers the costs associated with the off-hour operations and that the carrier would find the off-hour delivery operation profitable if a large number of receivers switch to the off-hours. The latter provides an important piece of information to support the development of the approximation model introduced in the paper. The proposed model estimates the joint market share in off-hour deliveries by computing the joint probability that all receivers in a typical tour of length M agree to off-hour deliveries, the probability that the carrier operation is profitable, and finally the joint market share. The model’s inputs are the probability that a typical receiver would participate in off-hour deliveries, the statistical distribution of tour lengths, and the probability that the carrier operation is profitable for a given number of receivers. The results indicate that the model provides the same results than other more complex methodologies for the practical range of values of receiver participation. For the high end of receiver participation (+80%), the formulation underestimates carrier participation. Because of its simplicity and practicality, the model provides an excellent way to estimate participation in off-hour delivery programs.