Pricing and collaboration in last mile delivery services

Seung Yoon Ko, Sung Won Cho, Chulung Lee

Research output: Contribution to journalArticlepeer-review

20 Citations (Scopus)


Recently, last mile delivery has emerged as an essential process that greatly affects the opportunity of obtaining delivery service market share due to the rapid increase in the business-to-consumer (B2C) service market. Express delivery companies are investing to expand the capacity of hub terminals to handle increasing delivery volume. As for securing massive delivery quantity by investment, companies must examine the profitability between increasing delivery quantity and price. This study proposes two strategies for a company's decision making regarding the adjustment of market density and price by developing a pricing and collaboration model based on the delivery time of the last mile process. A last mile delivery time function of market density is first derived from genetic algorithm (GA)-based simulation results of traveling salesman problem regarding the market density. The pricing model develops a procedure to determine the optimal price, maximizing the profit based on last mile delivery time function. In addition, a collaboration model, where a multi-objective integer programming problem is developed, is proposed to sustain long-term survival for small and medium-sized companies. In this paper, sensitivity analysis demonstrates the effect of delivery environment on the optimal price and profit. Also, a numerical example presents four different scenarios of the collaboration model to determine the applicability and efficiency of the model. These two proposed models present managerial insights for express delivery companies.

Original languageEnglish
Article number4560
JournalSustainability (Switzerland)
Issue number12
Publication statusPublished - 2018 Dec 3

Bibliographical note

Funding Information:
Funding: This research was supported by the Framework of International Cooperation Program managed by the National Research Foundation of Korea (NRF-2016K2A9A2A11938449).

Publisher Copyright:
© 2018 by the authors.


  • Collaboration
  • Express delivery service
  • Last mile delivery
  • Market share
  • Pricing

ASJC Scopus subject areas

  • Geography, Planning and Development
  • Renewable Energy, Sustainability and the Environment
  • Environmental Science (miscellaneous)
  • Energy Engineering and Power Technology
  • Management, Monitoring, Policy and Law


Dive into the research topics of 'Pricing and collaboration in last mile delivery services'. Together they form a unique fingerprint.

Cite this