Supply chain network design under profit maximization and oligopolistic competition

In this paper, we model the supply chain network design problem with oligopolistic firms who are involved in the competitive production, storage, and distribution of a homogeneous product to multiple demand markets. The profit-maximizing firms select both the capacities associated with the various supply chain network activities as well as the product quantities. We formulate the governing Nash–Cournot equilibrium conditions as a variational inequality problem and identify several special cases of the model, notably, a generalization of a spatial oligopoly and a classical oligopoly problem to include design capacity variables. The proposed computational approach, which is based on projected dynamical systems, fully exploits the network structure of the problems and yields closed form solutions at each iteration. In order to illustrate the modeling framework and the algorithm, we also provide solutions to a spectrum of numerical supply chain network oligopoly design examples.This paper makes a contribution to game theoretic modeling of competitive supply chain network design problems in an oligopolistic setting.     

Design of a rail transit line for profit maximization in a linear transportation corridor

This paper addresses the design problem of a rail transit line located in a linear urban transportation corridor. The service variables designed are a combination of rail line length, number and locations of stations, headway and fare. Two profit maximization models, which account for the effects of different transit pricing structures (flat and distance-based fare regimes), are proposed. In the proposed models, the effects of passenger demand elasticity and population density along the urban corridor are explicitly considered. The solution properties of the proposed models are explored and compared analytically, and the indifference condition for the two fare regimes in terms of the operator’s net profit is identified. A heuristic solution algorithm to solve the proposed models is presented. Numerical examples are provided to show the effects of the fare regimes, rail capital cost and urban configuration (in terms of urban population distribution and corridor length) on the design of the rail transit line and the profitability of the rail transit operations.     

Forecasting the demand for an employee Park and Ride service using commuters' stated choices

This paper uses Stated Choice (SC) data to forecast the demand for an employee Park and Ride service. Since it is well known that SC data contain sources of variation not present in Revealed Preference data we pay special attention to the scaling of the SC model. The results show that the modal shift away from parking-on site will be small unless the new service is accompanied by measures aimed at making parking on-site less attractive such as introducing parking charges.     

UK local authority attitudes to Park and Ride

Although the high level of implementation activity within the UK would suggest that bus-based Park and Ride (P&R) is a favoured policy option, little evidence exists which tests this assumption empirically or explores it in detail. In addition, a growing body of evidence indicates that P&R may increase the vehicle miles travelled (VMT) of its users. This paper reports on a recent survey of UK local authorities, both with and without current P&R provision, to understand the reasons behind its popularity and the level of recognition of its effectiveness in reducing car use. Particular consideration is given to the relationship between P&R and conventional public transport (particularly bus) services, as the transfer of passengers from these can have a significant impact on the effectiveness of P&R. The potential future growth of P&R is also addressed. The results suggest a number of divergences with the empirical evidence, particularly with regards the traffic effects of P&R. P&R is predicted to grow but there is support for implementing P&R in ways that may increase its effectiveness.     

The development of Park and Ride in Scotland

The provision of Park and Ride services is one of the principal means of addressing problems caused by traffic congestion in urban areas. Bus-based Park and Ride schemes are intended to attract motorists from outside an urban area to park at a peripherally located car park and travel by bus to the town centre. A number of local authorities in Scotland have been developing such schemes. These will introduce a new form of land use on the fringe of Scotland's towns and cities. In addition, the provision of Park and Ride is also likely to influence the catchment areas of retail and tourist centres and the residential location of employees in towns thus served.     

Enhanced Huff model for estimating Park and Ride (PnR) catchment areas in Perth,WA

A train station catchment area delineates the spatial territory from which the users of a train station are drawn. The size and shape of this catchment can be influenced by a variety of factors, such as the transport network, the location of stations and the service quality they offer, as well as the land use density and diversity in the transport corridor. Although numerous studies have been conducted to understand the size of catchment areas, limited research has focused on determining the spatial boundary (shape) of train station catchments. This paper develops a framework for deriving a spatial boundary of a Park and Ride (PnR) catchment area by incorporating the Huff model and Geographic Information Systems (GIS) technologies. The approach is staged, firstly determining the PnR station choice as a function of the attractiveness of a train station and the cost of access between the origin (such as a suburb) and the destination of a trip (such as the Perth CBD). Linear referencing method is then applied to re-define the origins to train stations based on the derived station choice probability. Finally, the spatial boundary of a catchment area is determined according to the adjusted origins, using GIS technologies. The model outputs were evaluated against licence plate survey of station users, where the Kappa coefficient (0.74) and overall accuracy (0.88) statistic suggested that the model's results are robust. The paper then shows how catchment area data can be used to better manage travel demand and plan design solutions aimed at increased accessibility to train stations.     

A profit-maximization location-capacity model for designing a service system with risk of service interruptions

This paper considers the design of an immobile service system in which each facility’s service process is subject to the risk of interruptions. The location-capacity decisions and allocations are simultaneously made to maximize the difference between the service provider’s profit and the sum of customers’ transportation and waiting costs. An efficient Lagrangian-based solution algorithm is developed, which solves large-sized instances with up to 50 service facilities and 500 customers in a few seconds. Several sensitivity analyses and managerial insights are presented. The model is also applied to a case study on a logistics network design problem in the zinc mining industry.     

Managing the risks of outsourcing: Time,quality and correlated costs

Cost, quality and time to market are three main factors for outsourcing management. A game theoretic model is used to design optimal outsourcing contracts including these three factors for a buyer and a supplier under Full Information (F) case and Asymmetric Information (A) case where the buyer does not share her internal variable cost information with the supplier. Optimal outsourcing contracts are derived and results of numerical experiment are also presented. Several insights of managing the outsourcing risks due to the Asymmetric Information are given for various industries, like cost-sensitive industry, time-sensitive industry, and quality-sensitive industry.     

Enhancing Park and Ride with access control: A case study of Southampton

Implementing and promoting more sustainable forms of urban transport are key policies of Local Authorities throughout the UK. Park and Ride (P&R) is one such system implemented widely in the UK, especially in historic towns and cities with limited road and parking space in the centre. Some cities (e.g. Rome and London) have also implemented forms of ‘access control’ to reduce congestion and/or pollution in central areas. This paper describes a feasibility analysis of a unique application studied for potential implementation in Southampton—the integration of P&R with access control on a key corridor in Eastern Southampton where traffic demand is likely to increase significantly in the coming years because of new housing developments. The system concept is a P&R facility with express buses to the City centre, keeping the corridor free-flowing for these buses (and other traffic) using a combination of bus lanes and access control.Following an outline of the policy context and system design, this paper then describes the corridor and network modelling undertaken to predict the impacts of the scheme and alternatives of it. This has been based mainly on the CONTRAM dynamic traffic assignment model, which covers the whole of Southampton and its surrounding motorway network. The assessment of the benefits of the various options in this scheme showed that the combination of P&R with signalised access control was the best option to improve the movement of people on the corridor. The paper concludes with a discussion of potential issues for implementation, including the need for complimentary measures and a consistent policy framework.     

A non-additive model for evaluating airline service quality

This study develops a non-additive model for evaluating and improving the service quality of airlines and compares its results with the conventional additive method. Service quality is a composite of various attributes and many in a system have inter-dependent characteristics that may not be correctly evaluated using conventional additive measures. A fuzzy integral is thus proposed. Factor analysis is initially used to extract some independent common-factors and fuzzy integral used to integrate the performance ratings of inter-dependent attributes in each common-factor. For the analytic hierarchy process a pair-wise comparative approach is adopted to determine the relative weights linking each independent common-factor. Finally, Grey relation analysis and simple additive weight method are used to find airline service quality. A study of international airlines is conducted for verification. Safety and reliability emerge as the critical factors of service quality.     

Handling uncertainty in Multi Regional Input-Output models by entropy maximization and fuzzy programming

Recently, great attention has been paid to the uncertainties associated with Multi Regional Input-Output (MRIO) models related to the available data sources. We propose a new method based on the entropy maximization principle and fuzzy optimization, which takes explicitly into account the uncertainty embedded in available information. It allows to estimate jointly the values of production level, the trade coefficients and the final demand values assuming the availability of incomplete and/or approximate data on some elements of trade coefficients and of final demand of goods. The model, applied to real scale problem, shows good estimation performances and robustness in different scenario.     

Stakeholder perspectives on the current and future roles of UK bus-based Park and Ride

UK bus-based Park and Ride (P&R) has increased significantly in popularity over the past 40 years although there are doubts over its role in reducing car use. This paper presents the findings from interviews with eight key stakeholders involved in UK P&R, which sought to provide insights into the popularity of P&R, particularly at the local government level, its success, and how the concept of P&R can be developed in the future to improve its role in reducing car use whilst maintaining its popularity. It is suggested that there are a range of goals for the use of P&R which extend beyond traffic reduction. It is discussed how there may be potential to develop the concept, particularly by decentralising P&R sites and developing their role as interchanges for public transport.     

Are outsourcing and non-aeronautical revenues important drivers in the efficiency of Spanish airports?

This paper evaluates the influence of contracting out, or outsourcing, certain airport services and of commercial diversification strategy. Although most of the effort is being put towards applying non-parametric techniques in airport efficiency studies, we have chosen parametric methodology. We use a distance function, as it has known advantages. The findings show the positive contribution of outsourcing and non-aeronautical revenues on the efficiency of the Spanish airports' network.     

Some potential issues of service quality reporting for airlines

Prior studies have examined the value relevance of operating measures in the airline industry. These indicators, however, have been evaluated in isolation. This study adds to the extant literature by investigating the interactive effects of service quality (e.g., on-time arrivals, flight delays, mishandled baggage, and complaints) and aircraft productivity on the firm's future performance as measured by one-quarter-ahead Return on Assets or Return on Sales. Overall, results show that negative factors such as more complaints and more mishandled baggage interact with aircraft productivity to further reduce one-quarter ahead Return on Assets or Return on Sales, with the results of complaints being more pronounced. On the other hand, there is no support for the interaction between on-time arrivals and aircraft productivity.     

Greening propensity and performance implications for logistics service providers

Stakeholders in the logistics industry have growing concern about the damage caused by logistics operations to the environment. Logistics service providers (LSPs) have taken steps to pursue environmental objectives by involving customers in their operations. This study defines greening propensity (GP) as “involvement of customers to perform logistics activities to achieve environmental performance”. We analyze survey data collected from the logistics industry in Hong Kong to address the following questions: What are the categories of greening capability in LSPs? What are the performance outcomes of LSPs’ greening capability? Theoretical contributions and implications of the study results are discussed.     

Estimating efficiency and its determinants in the hotel sector using a profit function

Inefficiency in the hotel sector is normally estimated through cost and scale efficiencies. This paper estimates hotel profit efficiency and its determinants employing a stochastic frontier profit function and the inefficiency effects function. The key advantage of this methodology is its ability to estimate efficiency for each hotel and the factors that explain differences in efficiency in a single-stage sampling procedure. The sample consists of 231 hotels in Spain in the period 2008–2012. Empirical evidence shows that the average level of profit efficiency is 45.85% and that age, labour productivity and location are determinants of this efficiency. Policy implications for the improvement of less efficient hotels are noted.     

The dark side of logistics outsourcing - Unraveling the potential risks leading to failed relationships

We identify and empirically examine the potential risk factors and their structural relationships that can cause a logistics outsourcing relationship to fail. Specifically, we investigate how the relationship risk as perceived by apparel wholesalers as user firms influence their evaluation on the asset and competence entrusted with their logistics service providers, which are logistics outsourcing risk factors considered important by the former in determining continued relationships with the latter. The results highlight the need for relationship management by user firms to mitigate the risks in asset and competence specifically invested in logistics service providers for their outsourced activities.     

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.     

Evaluation of level of service for transfer passengers at airports

Transfer passengers have quite different needs than those of originating and terminating passengers. For example, they do not make use of airport access roads. Other facilities may or may not be used depending on the type of transfers, the airport's operational configuration and the airline services. Despite the increasing importance of transfer passengers for airport operations, little research has been done to determine their needs. This study analyses transfer passengers’ views on the quality of services at the terminal building, using data collected at Bandaranaike International Airport in Sri Lanka, which aspires along with the airline ‘Sri Lankan’ to be a major hub for South Asia. Regression analysis was used to identify the transfer passenger facilities and services with the strongest effect on the overall perception of level of service. The application of regression analysis to the data collected at Bandaranaike International Airport shows that the courtesy of the security check staff and the quality of the Flight Information Display are among the most valued by transfer passengers at that airport.