Purchasing Transportation Services from Ocean Carriers

Xu, Zhou; Lai, Xiaofan

doi:10.1007/978-3-319-11891-8_13

Cited by 2 publications

(1 citation statement)

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“…Almost all the existing works aim to minimize a shipper's transportation cost based solely on carriers' shipping rates. In these works (see, e.g., Lim et al 2006, 2008, Xu and Lai 2015, the problems of liner service procurement are often formulated as (mixed) integer linear programming models, where cargo demands are assumed to be deterministic and known in advance. These models consist of basic decisions that include the selection of carriers and the allocation of cargo to the selected carriers, so as to satisfy the transportation of the cargoes as well as other basic constraints required by shippers and carriers, such as shippers' restrictions on the maximum and the minimum numbers of selected carriers, and carriers' limits on shipping capacities and requests for minimum quantity commitments.…”

Section: Introductionmentioning

confidence: 99%

Optimal Global Liner Service Procurement by Utilizing Liner Service Schedules

Lee

Shu

2021

Production and Operations Management

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F or global shippers (i.e., multinational manufacturers or retailers), strategic sourcing of container liner shipping services from ocean carriers is an important element of successful global supply chain management. We study how to utilize information about different ocean carriers' liner service schedules so that shippers can optimize their sourcing decisions over the selection of carriers to transport container cargoes around the world through multiple shipping lanes. We first introduce a deterministic optimization problem, where cargo demands are given in advance and in which inventory holding costs are included to capture the impacts of liner service schedules on the total operating cost. We formulate the deterministic optimization problem as a mixed integer linear program, which can be simplified by exploiting a totally unimodular property, and can thus be solved directly by a general optimization solver. To further capture the impact of liner service schedules on shippers' resilience to the uncertainties in cargo demands, we then introduce a two-stage robust optimization counterpart of the deterministic problem based on a probability-free demand uncertainty set. As the two-stage robust optimization problem is challenging to solve, we derive some novel reformulations that can enable us to develop an effective solution method. By exploiting the information about liner service schedules, we show how our proposed models and solution method can help shippers to optimize their liner service procurement decisions.

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Section: Introductionmentioning

confidence: 99%