Collection and delivery points (CDPs) allow logistics operators to consolidate multiple customer request deliveries on a single vehicle stop, reducing distribution costs. However, for customers to adopt CDPs, they must be willing to travel to a nearby CDP to pick up their parcels. This choice depends on personal preferences, the proximity of CDPs, and economic incentives. In this study, we propose a strategic model that integrates CDP network design with customer incentives to minimize costs. Using a continuous approximation approach, we estimate operational costs and determine the optimal number of CDPs and customer incentive levels. In our experiments, we show that CDPs alone can reduce costs by 16.9% while incorporating incentives increases potential savings to 28.1%. We find that CDPs are most beneficial in high-density areas, leveraging economies of scale, whereas incentives are more effective in low-density regions. This study provides valuable insights for understanding and designing cost-efficient urban parcel distribution systems.
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