Better Delivery/Pick Up Routes in the Presence of Uncertainty

liability for the contents or use thereof. The contents do not necessarily reflect the official views or policies of the State of California or the Department of Transportation. This report does not constitute a standard, specification, or regulation. 2 Abstract We consider the Courier Delivery Problem, a variant of the Vehicle Routing Problem with time windows in which customers appear probabilistically and their service times are uncertain. We use scenario-based stochastic optimization with recourse for uncertainty in customers and robust optimization for uncertainty in service times. Our proposed model generates a master plan and daily schedules by maximizing the coverage of customers and the similarity of routes in each scenario while minimizing the total time spent by the couriers and the total earliness and lateness penalty. For the large scale problem instance, we develop a two-phase insertion based approximate solution procedure, called Master And Daily Sched-uler (MADS), to balance these different objectives. We provide simulation results and show that our heuristic improves the similarity of routes and the lateness penalty at the expense of increased total time spent when compared to a solution by independently scheduling each day. Our experimental results also show improvements over a real-life solution.