Pricing and operational planning of a fixed-route ride-sharing service. (23rd January 2023)

• Record Type: Journal Article
• Authors: Zhu, Wanqing; Chen, Xi; Wang, Bo; Lawrence, Steven; Zhou, Hao; Bayram, Armagan
• Is Part Of: International journal of operational research. Volume 46:Number 1(2023)
• Page Start: 43
• Page End: 64
• Publication Date: 2023-01-23
• Subjects: fixed-route ride-sharing service -- service pricing -- service operations -- mode choice -- MNL model; Operations research -- Periodicals; 003.05
• Languages: English
• ISSNs: 1745-7645

Abstract

Fixed-route ride-sharing services, e.g., RidePal, OurBus, Urbvan, are becoming increasing popular among metropolitan areas. Effective pricing and operational planning of these services are undeniably crucial in their profitability and survival. However, the effectiveness of existing approaches has been hindered by the accuracy in demand estimation. In this paper, we develop a data-driven demand model using the multinomial logit model. We also construct a nonlinear optimisation model based on this demand model to jointly optimise price and operational decisions. A case study based on a real world fixed-route ride-sharing service in New York City is presented to demonstrate how the proposed models are used to improve the profitability of the service. We also show how this model can apply in settings where only limited public data are available to obtain effective estimation of demand and profit.