Integrating order delivery and return operations for order fulfillment in an online retail environment

In an online retail environment, the e-tailer is required to serve both delivery- and return-orders. The e-tailer aims to search for a cost-economical fulfillment plan, through flexible sharing, coordination and synchronization of fulfillment resources, while meeting customers' service time window promises. The resulting order fulfillment problem addresses the allocation of fulfillment centers' inventory to meet each delivery-order, the selection of fulfillment centers for receiving return-orders, the selection of routes and the scheduling of departures for different vehicles, the selection of itineraries for delivery-orders, as well as the selection of reverse movements of return-orders. We first present a flow-based formulation, which poses significantly methodological challenges. We then develop a hybrid algorithm combining variable neighborhood search heuristic and adaptive large neighborhood search heuristic. Extensive experiments are presented to evaluate the performance of the proposed approach. Finally, we numerically show effects of order distribution, the ratio of the number of delivery-orders to the number of return-orders, and order fulfillment modes on e-tailers' fulfillment performance.