Seminar On A Little Speed-Customization Goes a Long Way: Imminent Delivery Networks of Online Retailers

By: Prof. Sandun Perera, Assistant Professor of Operations and Supply Chain Management, University of Michigan-Flint

Abstract of the Talk: As last mile (or outbound) costs decrease, the optimal number of distribution locations (or delivery hubs/points) should also decrease due to the usual economies of scale logic of inbound delivery costs etc. In this paper, They showed that when the last mile costs decrease, the number of delivery hubs could increase if the customers are sensitive to the delivery time. They  introduced a perfect (100%) speed customization strategy which was more profitable than the exiting strategies used in the market, and explained how such a microlevel speed customization can be practically implemented via a discrete speed customization strategy. Interestingly, under their discrete speed customization strategy, a little speed customization goes a long way in terms of profit.




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