Strategic Time Slot Management: A Priori Routing for Online Grocery Retailing

Time slot management refers to the design and control of the delivery time slots offered to customers during the online ordering process. Strategic time slot management is an innovative variant in which only a single time slot is offered each day of the week and a priori delivery routes are used to guide time slot availability. Strategic time slot management simplifies time slot control and fulfillment center operations. We propose a 2-stage stochastic programming formulation for the design of a priori delivery routes and time slot assignments and a sample average approximation algorithm for its solution. An efficient dynamic program is developed for calculating the expected revenue of an a priori route. An extensive computational study demonstrate the efficacy of the proposed approach and provides insights in to the benefits of strategic time slot management.