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Cost allocation in collaborative forest transportation

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Author Info

  • Frisk, Mikael

    ()
    (Skogforsk, Uppsala)

  • Göthe-Lundgren, Maud

    ()
    (Department of Mathematics, Linköpings universitet)

  • Jörnsten, Kurt

    ()
    (Dept. of Finance and Management Science, Norwegian School of Economics and Business Administration)

  • Rönnqvist, Mikael

    ()
    (Dept. of Finance and Management Science, Norwegian School of Economics and Business Administration)

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    Abstract

    Transportation planning is an important part of the wood flow chain in forestry. There are often several forest companies operating in the same region and co-ordination between two or more companies is rare. However, there is an increasing interest in collaborative planning as the potential savings are large, often in the range 5-15%. A key question is how savings should be distributed among the participants. In this paper we investigate a number of possibilities based on economic models including Shapley value, the nucleolus, separable and non-separable costs, shadow prices and volume weights. We also propose a new allocation method based on finding as equal relative profits as possible among the participants. A case study including eight forest companies is described and analyzed.

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    Bibliographic Info

    Paper provided by Department of Business and Management Science, Norwegian School of Economics in its series Discussion Papers with number 2006/15.

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    Length: 27 pages
    Date of creation: 03 Nov 2006
    Date of revision:
    Handle: RePEc:hhs:nhhfms:2006_015

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    Postal: NHH, Department of Business and Management Science, Helleveien 30, N-5045 Bergen, Norway
    Phone: +47 55 95 92 93
    Fax: +47 55 95 96 50
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    Web page: http://www.nhh.no/en/research-faculty/department-of-business-and-management-science.aspx
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    Related research

    Keywords: Transportation; OR in natural resources; Supply chain management; Economics; Group decisions and negotiations; Linear programming;

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    References

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    1. S. H. Tijs & T. S. H. Driessen, 1986. "Game Theory and Cost Allocation Problems," Management Science, INFORMS, vol. 32(8), pages 1015-1028, August.
    2. Tijs, S.H. & Driessen, T.S.H., 1986. "Game theory and cost allocation problems," Open Access publications from Tilburg University urn:nbn:nl:ui:12-154261, Tilburg University.
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    Cited by:
    1. Audy, Jean-François & D’Amours, Sophie & Rönnqvist, Mikael, 2012. "An empirical study on coalition formation and cost/savings allocation," International Journal of Production Economics, Elsevier, vol. 136(1), pages 13-27.

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