Optimal mechanisms for efficient order assignment in food delivery platforms

Abstract

In the food delivery services platform, the challenge lies in efficiently assigning orders to different types of workers to ensure both the platform’s profitability and customer satisfaction in terms of waiting time. To explore the best approach, we will utilize a model representing a platform serving food through a two-server queue, where customers arrive continuously following a Poisson distribution and each server has a general service time. The two types of servers in this model are the "biker" and the "walker." The biker is capable of delivering orders at a faster pace, but this comes with the drawback of a fixed investment in their bike and higher expenses per unit time traveled. On the other hand, the walker is slower but has no fixed costs and incurs lower expenses per time covered. To navigate this complex dynamic, we will employ a contract design. This involves determining the batch size of each courier’s deliveries and designing a payment scheme to incentivize couriers to join the platform and discourage dishonesty regarding their true abilities. In our initial analysis, we have determined that the optimal strategy involves implementing a strategic cut-off point. Orders below this threshold are assigned to the walker, while orders beyond this point are assigned to the biker. This strategic division allows for a balanced approach that ensures efficiency and cost-effectiveness. Keywords: Mechanism Design; Order Allocation; Delivery Platform

Date of Award	2024
Original language	English
Awarding Institution	The Hong Kong University of Science and Technology
Supervisor	Ying Ju CHEN (Supervisor)