Title: Pricing and operational planning of a fixed-route ride-sharing service

Authors: Wanqing Zhu; Xi Chen; Bo Wang; Steven Lawrence; Hao Zhou; Armagan Bayram

Addresses: Department of Industrial and Manufacturing Systems Engineering, University of Michigan-Dearborn, Dearborn, Michigan 48128, USA ' Department of Industrial and Manufacturing Systems Engineering, University of Michigan-Dearborn, Dearborn, Michigan 48128, USA ' Ford Motor Company, Dearborn, Michigan 48124, USA ' Ford Motor Company, Dearborn, Michigan 48124, USA ' Ford Motor Company, Dearborn, Michigan 48124, USA ' Department of Industrial and Manufacturing Systems Engineering, University of Michigan-Dearborn, Dearborn, Michigan 48128, USA

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.

Keywords: fixed-route ride-sharing service; service pricing; service operations; mode choice; MNL model.

DOI: 10.1504/IJOR.2023.128579

International Journal of Operational Research, 2023 Vol.46 No.1, pp.43 - 64

Received: 21 Aug 2019
Accepted: 09 Jan 2020
Published online: 26 Jan 2023 *