Integration of the cost allocation in the optimization of collaborative bundling

A model is proposed that integrates a cost allocation method – the Shapley value – into the optimization of the synchronized consolidation of transportation orders. By balancing each partner’s delivery date changes (when synchronizing) against its allocated profit, it ensures that the operational plan is acceptable by all partners. In comparison to a model that first plans and then divides the costs, this model limits expensive delivery date changes and does not systematically favor a company with a slightly higher cost of change.     

A supply chain network design considering transportation cost discounts

This study addresses an integrated facility location and inventory allocation problem considering transportation cost discounts. Specifically, this article considers two types of transportation discounts simultaneously: quantity discounts for inbound transportation cost and distance discounts for outbound transportation cost. This study uses an approximation procedure to simplify DC distance calculation details, and develops an algorithm to solve the aforementioned supply chain management (SCM) problems using nonlinear optimization techniques. Numerical studies illustrate the solution procedures and the effects of the model parameters on the SCM decisions and total costs. Results of this study serve as a reference for business managers and administrators.     

A metaheuristic approach to the reliable location routing problem under disruptions

This paper examines a reliable capacitated location–routing problem in which depots are randomly disrupted. Customers whose depots fail must be reinserted into the routes of surviving depots. We present a scenario-based mixed-integer programming model to optimize depot location, outbound delivery routing, and backup plans. We design a metaheuristic algorithm that is based on a maximum-likelihood sampling method, route-reallocation improvement, two-stage neighborhood search and simulated annealing. Numerical tests show that the heuristic is able to generate results that would keep operating costs and failure costs well balanced. Managerial insights on scenario identification, facility deployment and model simplification are drawn.     

A spatial portfolio theory of household location choice

Classical residential location choice models were constructed as uncertainty-free. Using the expected utility theorem, urban researchers have dealt with different types of uncertainties, such as uncertain income, uncertain housing price and uncertain transportation cost, etc. This paper, however, considers uncertain traveling frequencies in two-workplace setting, a novel theory on the emergence of a new centre between two existing CBDs can then be formulated. It can be regarded as a spatial portfolio theory as the theory predicts that household location choice would strike a balance between commuting cost savings (return) and variance of the savings (risk). Empirical evidence on the housing transaction price gradient changes in Hong Kong supports the theory.     

Economic geography and transportation conditions with endogenous time distribution amongst work, travel, and leisure

This study examines possible effects of transportation conditions upon economic growth and geography. The paper proposes a model of economic growth with travel time and cost, housing, residential distribution, amenity, and endogenous time distribution amongst work, travel, and leisure. It deals with a dynamic interaction among capital accumulation, land use, housing market, environmental change, and transportation conditions in a linear economy. Although transportation systems are simple in this paper in the light of contemporary literature in transportation research, the paper demonstrates a way to integrating some important models in the literature in transportation research, economic growth theory and urban economics so that the significance of transportation systems upon economies can be properly analyzed.     

Embedding economies of scale concepts for hub network design

We explore the idea of endogenous hub location on a network. In contrast to much of the literature, we propose that hub networks may emerge naturally out of a set of assumptions and conditions borrowed from equilibrium traffic assignment. To this end, we focus on applying a nonlinear cost function that rewards economies of scale on all network links. A model is presented and implemented in a GIS environment using both a 100-node intercity matrix and several synthesized interaction matrices. We compare solutions for different assumptions about network costs, and visualize the results. We find that under discounted conditions, network flow is re-routed to take advantage of the cost savings for amalgamation and that several cities emerge as centers through which large amounts of flow pass. Larger cities such as Los Angeles, New York and Chicago serve gateway functions. We also find that smaller cities such as Oklahoma City, Pittsburgh, Indianapolis, and Knoxville serve major gateway functions because of their locational advantages. Our paper should be of interest to the planner of a surface transportation system, or those interested in nodal concepts such as gateways and transport geography. Results are discussed in light of hub and spoke networks and suggestions are made for future research.     

Location quotient-based travel costs for determining accessibility changes

Accessibility is not a static feature because it is affected by a large number of factors, such as changes in transport infrastructure, the spatial distribution of human activities, and their interdependence. In this study, we examine the role of location quotient-based travel costs as the travel impedance function in accessibility measurement to better capture accessibility changes over time. The travel impedance function is one of the most widely studied aspects of accessibility. In most studies, travel impedance is determined by a negative exponential function in the travel cost assessment of the accessibility measure as a means to incorporate the distance decay effect. Here, we apply an accessibility index that uses location quotient-based travel costs and an accessibility measure with simple travel costs in order to test the proposed theory. The results of the two methods vary considerably. The location quotient method is discussed in detail, including its potential advantages for measuring accessibility changes. We argue that the location quotient-based travel cost is an appropriate method for determining the travel impedance function in accessibility measurements, especially for analyzing accessibility changes.     

Analytical models of rail transportation service in the grain supply chain: Deconstructing the operational and economic advantages of shuttle train service

This paper introduces conceptual and mathematical models of the domestic grain supply chain incorporating trucking, elevator storage, and rail transportation. We compare conventional rail service supported by country elevators with shuttle service supported by terminal elevators across three critical transportation service dimensions: travel time, cost, and capacity. Even after taking into account trucking and elevator storage, the time and cost model results indicate that shuttle service transports grain faster and reduces logistical supply chain costs, respectively, relative to conventional service. The rail capacity model results demonstrate that shifting grain from conventional to shuttle service significantly increases rail capacity.     

Households transport-home energy conservation strategies in response to energy price policies: A stated adaptation experiment based on portfolio choices and cross effects designs

This article explores consumer investment choice in long-term energy conservation technology and assesses trade-offs in energy saving behaviour between the housing and transportation domains. The long-term energy conservation choice problem is conceptualized as a portfolio choice problem. Consequently, to measure trade-offs between investments in housing and transport options, a cross effects choice design is developed in which respondents were shown one or more alternate ways to reduce their current energy consumption: (1) investing in new technology in the house, such as solar panels; (2) exchanging the current car for a more energy efficient car; (3) buying a new energy-efficient car, such as EV or solar car; (4) moving house to reduce current travel distances. To help respondents linking these options to their current energy consumption, a new Web-based survey system (SINA) to implement and administer stated adaptation experiments was developed. The system was used to collect two sets of data. First, data about out-of-home and in-home energy consumption, together with detailed time use data, was collected. Second, using a cross effects design, respondents were asked to select a portfolio of energy-saving strategies in response to different energy pricing policy scenarios. Results reported in this paper are based on 572 respondents who completed the survey and responded to seven adaptation questions based on their current energy expenditures. A random parameters logit model is estimated to predict the probability of choosing a particular portfolio of energy-saving options. Estimation results indicate that individuals from different socio-demographic groups exhibit varied preferences. The saving option characteristics, especially cost related characteristics have significant effects on individuals' preferences. Moreover, the results also showed significant effects of choice set composition on energy saving options. Further, the energy pricing policies had showed mixed effects on individual's preferences.     

Autos,transit and bicycles: Comparing the costs in large Chinese cities

This study compares the full costs of seven passenger modes in the large Chinese cities facing the difficult yet crucial choice among alternative passenger transportation systems. The seven modes are evaluated at varied traffic volumes in hypothetical radial and circumferential commuting corridors. Using detailed estimates of private and social costs, the full cost of each mode is minimized by optimizing infrastructure investment and operation plans. On all corridors and across different scenarios, commuting by one or more forms of bus transit or bicycle costs less than automobile or rail. Nonetheless, in circumferential corridors, rail can be almost as cost-effective as bus under certain conditions, and bicycle can be less cost-effective than bus in some cases. Unlike results from similar studies conducted in the US, automobile commuting does not cost less than bus transportation at low traffic volumes.     

Coordinated inventory replenishment and outsourced transportation operations

We consider a one-warehouse N retailers supply chain with stochastic demand. Inventory is managed in-house whereas transportation is outsourced to a 3PL provider. We develop analytical expressions for the operating characteristics under both periodic and continuous joint replenishment policies. We identify the settings where a periodic review policy is comparable to a continuous review one. In our numerical test-bed, the periodic policy performed best in larger supply chains operating with larger trucks. We also observed that if the excess utilization charge is less than 25%, outsourcing becomes beneficial even if outsourcing cost is 25% more than the in-house fleet costs.     

The impact of slow ocean steaming on delivery reliability and fuel consumption

With a dominant volume of global transportation being conducted by sea, ocean container transport greatly impacts the global economy. Since sea vessels are drastically more fuel efficient when traveling at lower speeds, slow steaming has become a widely adopted practice to reduce bunker costs. However, this leads to a longer transportation time, which together with the unpredictability of the delay has been a big challenge. We propose a model to quantify the relationship among shipping time, bunker cost and delivery reliability. Our findings lead to a simple and implementable policy with a controlled cost and guaranteed delivery reliability.     

The impact of railroad mergers on grain transportation markets: a Kansas case study

While there have been many studies of the impact of railroad deregulation on agricultural transportation markets there have been very few that address the impact of railroad mergers on rail grain prices and the distribution of efficiency gains. The purpose of this paper is to add to the sparse literature regarding the effect of railroad mergers on agricultural transportation markets. Given the ever declining number of Class I railroads, this research is very timely.The specific objectives of the research are as follows: (1) Analyze the impact of the Burlington Northern (BN)–Santa Fe (SF) merger on the ability of the BNSF to increase prices on movements of Kansas wheat to Houston, Texas. (2) Analyze the impact of the Union Pacific (UP)–Southern Pacific (SP) merger on the ability of the UPSP to increase prices on movements of Kansas wheat to Houston, Texas. (3) Analyze changes in Kansas wheat logistics system costs as a result of the BN–SF and UP–SP mergers.Two models are developed to achieve the objectives of the study. A network model of the wheat logistics system is used to identify the least cost transportation routes from the Kansas study area to the market at Houston, Texas. A profit improvement algorithm is developed to measure the amount by which railroads can raise their prices above variable cost.The BNSF and UPSP achieve only minor increases in market power (measured by the ratio of revenue to variable cost) because the merged railroads have only slight advantages in cost relative to other railroads that serve the same areas as the merged railroads. Wheat shippers benefit from merger-induced reductions in transportation and handling costs. Shippers are likely to capture a significant share of these cost reductions since intrarailroad competition is present after the mergers. Transport cost reductions accompany mergers due to more direct routing of wheat shipments and the assumption that the merged railroad operates at the costs of the lower cost partner.     

Combining service frequency and vehicle routing for managing supplier shipments

This paper proposes a new approach to designing inbound material collection routes that considers pick-up frequency and spatial design as joint decisions to minimize total logistics (transportation plus inventory) cost. The clustering-based optimization uses an approximation to the actual cost of a routing solution without actual route construction. We show that the problem is analogous to a single-source fixed-charge facility location problem, and near-optimal solutions can be found using an efficient heuristic algorithm. Tests show the effectiveness of how this model is formulated and a case study demonstrates that substantial total cost savings can be achieved in realistic applications.     

Incorporating inventory control decisions into a strategic distribution network design model with stochastic demand

In this paper, we propose a simultaneous approach to incorporate inventory control decisions––such as economic order quantity and safety stock decisions––into typical facility location models, which are used to solve the distribution network design problem. A simultaneous model is developed considering a stochastic demand, modeling also the risk pooling phenomenon. We present a non-linear-mixed-integer model and a heuristic solution approach, based on Lagrangian relaxation and the sub-gradient method. In a numerical application, we found that the potential cost reduction, compared to the traditional approach, increases when the holding costs and/or the variability of demand are higher.     

Hub location under capacity constraints

Hub-and-spoke networks are employed in cargo transportation. This paper presents a model for hub location in these kinds of networks. Hubs are considered capacity limited. For that reason, costs due to congestion in hubs are introduced into the model. A Simulated Annealing algorithm has been developed to solve the model. The algorithm includes a balanced module, the purpose of which is to reduce congestion. Each hub is modelled as an M/M/1 queuing system. The algorithm has been tested in randomly created networks. The results show that when a situation of congestion occurs, the proposed algorithm enables better solutions to be found, thereby improving the standard of service.     

A location-inventory model for large three-level supply chains

We study the location-inventory problem in three-level supply networks. Our model integrates three decisions: the distribution centers location, flows allocation, and shipment sizes. We propose a nonlinear continuous formulation, including transportation, fixed, handling and holding costs, which decomposes into a closed-form equation and a linear program when the DC flows are fixed. We thus develop an iterative heuristic that estimates the DC flows a priori, solves the linear program, and then improves the DC flow estimations. Extensive numerical experiments show that the approach can design large supply networks both effectively and efficiently, and a case study is discussed.     

Do low cost carriers have different corporate governance models?

In this paper, we investigate whether different business models in the same industry (passenger air transportation) lead to different corporate governance models. We found that low-cost carriers organise their boards differently from full service carriers to achieve lower costs and a faster decision-making process that is required by their business model. We also found that low-cost carriers and full service carriers solve their potential agency cost problems differently and that full service carriers have more board monitoring committees, and low-cost carriers have a closer coincidence of interests between shareholders and executive directors.     

Distortional Bullwhip Effects on carriers

This paper analyzes the Bullwhip Effect (BWE) problem from the (carriers’) viewpoint. The analysis explores how retailer’s limited capability to forecast end-customer demand and their sub-optimal replenishment policies distort service demand signals to carriers. The consequent unnecessary increases in carriers’ capacity costs and operational instability are quantified for a context of pronounced seasonality. The paper finds that carriers unable to adjust transportation capacity to seasonal changes can incur costs of nearly five times what is possible with maximum forecasting capabilities and prudent replenishment policies. Another major finding is that replenishment policy is superior to forecasting capability in reducing BWE-related costs.