Collaborative distribution between two logistics service providers

Abstract

Mathematical models are described for collaborative distribution between two logistics service providers (LSPs). We find that (a) collaborative distribution is conditionally profitable for LSPs, and the conditions for cooperation are given; (b) LSPs save more costs primarily by shortening the delivery distance and decreasing delivery speed; (c) collaborative distribution makes the delivery time either shorter or longer; (d) if one LSP changes its equilibrium price, the total profit conditionally increases, and this condition is related to demand structure and delivery cost structure; and (e) collaborative distribution can solve the personalization of delivery time and reduce pollution to some extent. For the companies sharing the incremental profit, we characterize a transfer payment contract that includes fixed and variable fees. Our findings suggest that LSPs should adopt collaborative distribution to formulate an optimal distribution plan to save costs and shorten the delivery time, and should select partners with smaller cost parameters and both different and moderate speeds. In addition, warehouse and vehicle sharing are beneficial to the implementation of collaborative distribution.

A review on cost allocation methods in collaborative transportation

“…Vehicle routing Göthe-Lundgren et al (1996), Engevall et al (2004), Krajewska and Kopfer (2006), Krajewska et al (2008), Caprara and Letchford (2010), Cruijssen et al (2010), Liu et al (2010), Dahl and Derigs (2011),Özener (2014), Vanovermeire and Sörensen (2014b), Zakharov and Shchegryaev (2015). Joint distribution Hamers et al (1999),Özener and Ergun (2008), Agarwal and Ergun (2010), Audy et al (2011), Granot et al (2011), Dai and Chen (2012), Yilmaz and Savasaneril (2012), Lozano et al (2013), Nguyen et al (2014), Vanovermeire and Sörensen (2014a), Vanovermeire and Sörensen (2014b), Vanovermeire et al (2014), Dai and Chen (2015), Hezarkhani et al (2015), Yang et al (2015). Inventory Anupindi et al (2001), Anily and Haviv (2007), Wong et al (2007), Fiestras-Janeiro et al (2012, Cheng et al (2013), Fiestras-Janeiro et al (2013),Özener et al (2013, Fang and Cho (2014).…”

“…Instead of costs, the carriers here must usually solve a profit allocation problem. This has been addressed in Agarwal and Ergun (2010), Dai and Chen (2012), Dai and Chen (2015), and Yang et al (2015). Hezarkhani et al (2015) also study a carrier collaboration problem, but seen from the minimum cost perspective.…”

“…A large part of the articles included in this review are motivated in the context of carrier companies providing ground transportation services. The list here includes Krajewska and Kopfer (2006), Krajewska et al (2008),Özener and Ergun (2008), Agarwal and Ergun (2010), Berger and Bierwirth (2010), Liu et al (2010), Dahl and Derigs (2011), Dai and Chen (2012),Özener (2014), Vanovermeire and Sörensen (2014b), Dai and Chen (2015), Yang et al (2015), and Zakharov and Shchegryaev (2015). Others arise in the context of railcar companies (Cheng et al, 2013) and the maritime transportation sector (Yilmaz and Savasaneril, 2012).…”

“…(b) Contribution Constrained Packing Model allocation. Yang et al (2015) A transfer payment contract including fixed and variable fees based on a Nash bargaining model. et al, 2012a;Flisberg et al, 2015;, and the oil and gas industry (Engevall et al, 1998(Engevall et al, , 2004Massol and Tchung-Ming, 2010;Özener et al, 2013;.…”

“…6%, 9.3%, 14.2% Guajardo et al (2015) 3, 8 √ 8. 6%, 9.3%, 14.2% Engevall et al (1998) 5 √ (2015) 3, 5 Krajewska et al (2008) 2, 5 √ 11.50% Potters et al (1992) 4 Fiestras-Janeiro et al (2013) 4 Zakharov and Shchegryaev (2015) 4 Agarwal and Ergun (2010) 2, 3, 4 Cruijssen et al (2010) 3, 4 √ 23.70% Audy et al (2011) 3, 4 √ 12.90% Fang and Cho (2014) 3, 4 Wang et al (2015) 3, 4 Krajewska and Kopfer (2006) 3 Estévez-Fernández et al (2009) 3 Berger and Bierwirth (2010) 3 Liu et al (2010) 3 Dai and Chen (2012) 3 Fiestras-Janeiro et al (2012) 3 Yengin (2012) 3 Cheng et al (2013) 3 Toriello and Uhan (2013) 3 Vanovermeire et al (2014) 3 √ 25.83%, 41.81% Vanovermeire and Sörensen (2014a) 3 Hezarkhani et al (2015) 3 Fishburn and Pollak (1983) 2, 3 Anupindi et al (2001) 2, 3 Wong et al (2007) 2, 3 Samet et al (1984) 2 Anily and Haviv (2007) 2 Lehoux et al (2011) 2 √ 4% Vanovermeire and Sörensen (2014b) 2 Yang et al (2015Yang et al ( ) 2 et al (2015, which includes the rationality constraints only for the singleton coalitions of the type S = { j} and its complement S = N \ { j} for all j ∈ N. Although the semicore is a weaker concept than the core in terms of stability, it is more practical, as it requires calculating the characteristic function values for only 2n + 1 coalitions instead of the 2 n − 1 required by the core. An "approximate stability assessment" procedure is developed inÖzener et al (2013), based on sampling of subsets and testing the stability of coalitions on these sampled subsets only.…”