Cost and Market-based Pricing in the Courier Express and Parcel Service Industry

This work presents a decision support system (DSS) that allows service providers in the courier, express, and parcel (CEP) delivery industry to improve speed and effectiveness in the pricing request for quotations (RFQ) for logistic services. This will be achieved, firstly, by calculating the impact of the insertion of new customers into an existing CEP network based on the marginal cost by solving a large scale vehicle routing problems (VRP). Secondly, the knowledge of the CEP company's sales organization about the success of former RFQs and the competitor's pricing policy is combined in two regression models in order to obtain a price recommendation for a given customer RFQ. Finally, the DSS allows the placing of an offer under a given RFQ winning probability, if the price recommendation is higher than the cost-based price with the addition a minimum profit margin which is defined by the management.