Applying game theory in vehicle routing problem with returns

Abstract

Vehicle Routing Problem with Spontaneously Picking Up and Delivering (VRPSPD) has become the serious consideration in the real world, especially in the e-commmerce trade for last-mile delivery products to customers effectively and efficiently. Online shopping is now becoming more popular and increasing significantly which leads to the increase in the number of cancelled or redelivered customers’ orders. The purpose of this paper is to propose a new method to calculate the preventive return orders so that the firm can maintain the level of customer service as well as save transportation cost, increase successful delivery rate. VRPSPD with Returns was applied to solve this situation. In detail, this thesis based on the concept and model of VRPSPD to modify for a suitable model including the additional element which is the expected penalty cost of returned products. The metaheuristics method is used in this model. Then, the new model which applied Game Theory is proposed to find the final solution for the previous model. Nash Equilibrium was applied to find the NE solution. The result of this method found out the minimum transportation cost and the minimum payoff of each alternatives that can balance the benefits of both players. In this work, the proposed model was applied for Thu Duc hub of Lazada. Keywords: VRPSPD, VRPSPDWR, metaheuristics, Game Theory, Nash Equilibrium