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A Study of Demand Stochasticity in Service Network Design

Author

Listed:
  • Arnt-Gunnar Lium

    (Molde University College, NO-6402 Molde, Norway)

  • Teodor Gabriel Crainic

    (Département de Management et Technologie, École des Sciences de la Gestion, and Interuniversity Research Centre on Enterprise Networks, Logistics, and Transportation (CIRRELT), Université du Québec à Montréal, Centre-ville, Montréal, Québec H3C 3P8, Canada)

  • Stein W. Wallace

    (Molde University College, NO-6402 Molde, Norway)

Abstract

The objective of this paper is to investigate the importance of introducing stochastic elements into service network design formulations. To offer insights into this issue, we take a basic version of the problem in which periodic schedules are built for a number of vehicles and where only the demand may vary stochastically. We study how solutions based on uncertain demand differ from solutions based on deterministic demand and provide qualitative descriptions of the structural differences. Some of these structural differences provide a hedge against uncertainty by using consolidation. This way we get consolidation as output from the model rather than as an a priori required property. Service networks with such properties are robust, as seen by the customers, by providing operational flexibility.

Suggested Citation

  • Arnt-Gunnar Lium & Teodor Gabriel Crainic & Stein W. Wallace, 2009. "A Study of Demand Stochasticity in Service Network Design," Transportation Science, INFORMS, vol. 43(2), pages 144-157, May.
    • Handle: RePEc:inm:ortrsc:v:43:y:2009:i:2:p:144-157
    DOI: 10.1287/trsc.1090.0265
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    References listed on IDEAS

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    Full references (including those not matched with items on IDEAS)

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