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Analysis of collaborative savings and cost allocation techniques for the cooperative carrier facility location problem

Author

Listed:
  • Lotte Verdonck

    (Hasselt University, Diepenbeek, Belgium
    Research Foundation Flanders (FWO), Brussels, Belgium)

  • Patrick Beullens

    (University of Southampton, Southampton, UK)

  • An Caris

    (Hasselt University, Diepenbeek, Belgium
    Research Foundation Flanders (FWO), Brussels, Belgium)

  • Katrien Ramaekers

    (Hasselt University, Diepenbeek, Belgium)

  • Gerrit K Janssens

    (Hasselt University, Diepenbeek, Belgium)

Abstract

Transport companies may cooperate to increase their efficiency levels by, for example, the exchange of orders or vehicle capacity. In this paper a new approach to horizontal carrier collaboration is presented: the sharing of distribution centres (DCs) with partnering organisations. This problem can be classified as a cooperative facility location problem and formulated as an innovative mixed integer linear programme. To ensure cooperation sustainability, collaborative costs need to be allocated fairly to the different participants. To analyse the benefits of cooperative facility location and the effects of different cost allocation techniques, numerical experiments based on experimental design are carried out on a UK case study. Sharing DCs may lead to significant cost savings up to 21.6%. In contrast to the case of sharing orders or vehicles, there are diseconomies of scale in terms of the number of partners and more collaborative benefit can be expected when partners are unequal in size. Moreover, results indicate that horizontal collaboration at the level of DCs works well with a limited number of partners and can be based on intuitively appealing cost sharing techniques, which may reduce alliance complexity and enforce the strength of mutual partner relationships.

Suggested Citation

  • Lotte Verdonck & Patrick Beullens & An Caris & Katrien Ramaekers & Gerrit K Janssens, 2016. "Analysis of collaborative savings and cost allocation techniques for the cooperative carrier facility location problem," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 67(6), pages 853-871, June.
  • Handle: RePEc:pal:jorsoc:v:67:y:2016:i:6:p:853-871
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    Citations

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    Cited by:

    1. Gao, Evelyn & Sowlati, Taraneh & Akhtari, Shaghaygh, 2019. "Profit allocation in collaborative bioenergy and biofuel supply chains," Energy, Elsevier, vol. 188(C).
    2. Ramaekers, Katrien & Verdonck, Lotte & Caris, An & Meers, Dries & Macharis, Cathy, 2017. "Allocating collaborative costs in multimodal barge networks for freight bundling," Journal of Transport Geography, Elsevier, vol. 65(C), pages 56-69.
    3. Alikhani, Reza & Eskandarpour, Majid & Jahani, Hamed, 2023. "Collaborative distribution network design with surging demand and facility disruptions," International Journal of Production Economics, Elsevier, vol. 262(C).
    4. Defryn, Christof & Sörensen, Kenneth & Dullaert, Wout, 2019. "Integrating partner objectives in horizontal logistics optimisation models," Omega, Elsevier, vol. 82(C), pages 1-12.
    5. Katsaliaki, Korina & Kumar, Sameer & Loulos, Vasilis, 2024. "Supply chain coopetition: A review of structures, mechanisms and dynamics," International Journal of Production Economics, Elsevier, vol. 267(C).
    6. Thomas Hacardiaux & Christof Defryn & Jean-Sébastien Tancrez & Lotte Verdonck, 2022. "Balancing partner preferences for logistics costs and carbon footprint in a horizontal cooperation," OR Spectrum: Quantitative Approaches in Management, Springer;Gesellschaft für Operations Research e.V., vol. 44(1), pages 121-153, March.
    7. Dahlberg, Joen & Göthe-Lundgren, Maud & Engevall, Stefan, 2017. "A note on the nonuniqueness of the Equal Profit Method," Applied Mathematics and Computation, Elsevier, vol. 308(C), pages 84-89.
    8. Guo, Yuhan & Yu, Junyu & Allaoui, Hamid & Choudhary, Alok, 2022. "Lateral collaboration with cost-sharing in sustainable supply chain optimisation: A combinatorial framework," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 157(C).
    9. Bouchery, Yann & Hezarkhani, Behzad & Stauffer, Gautier, 2022. "Coalition formation and cost sharing for truck platooning," Transportation Research Part B: Methodological, Elsevier, vol. 165(C), pages 15-34.
    10. Defryn, Christof & Sörensen, Kenneth, 2018. "Multi-objective optimisation models for the travelling salesman problem with horizontal cooperation," European Journal of Operational Research, Elsevier, vol. 267(3), pages 891-903.
    11. Ghanei, Shima & Contreras, Ivan & Cordeau, Jean-François, 2023. "A two-stage stochastic collaborative intertwined supply network design problem under multiple disruptions," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 170(C).
    12. Hacardiaux, Thomas & Defryn, Christof & Tancrez, Jean-Sébastien & Verdonck, Lotte, 2020. "Balancing partner preferences for logistics costs and carbon footprint in a horizontal cooperation," Research Memorandum 002, Maastricht University, Graduate School of Business and Economics (GSBE).
    13. Mrabti, Nassim & Hamani, Nadia & Boulaksil, Youssef & Amine Gargouri, Mohamed & Delahoche, Laurent, 2022. "A multi-objective optimization model for the problems of sustainable collaborative hub location and cost sharing," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 164(C).
    14. Thomas Hacardiaux & Jean-Sébastien Tancrez, 2022. "Assessing the benefits of horizontal cooperation for the various stages of the supply chain," Operational Research, Springer, vol. 22(4), pages 3901-3924, September.
    15. Thomas Hacardiaux & Jean-Sébastien Tancrez, 2020. "Assessing the environmental benefits of horizontal cooperation using a location-inventory model," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 28(4), pages 1363-1387, December.
    16. Lotte Verdonck & Katrien Ramaekers & Benoît Depaire & An Caris & Gerrit K. Janssens, 2019. "Analysing the Effect of Partner Characteristics on the Performance of Horizontal Carrier Collaborations," Networks and Spatial Economics, Springer, vol. 19(2), pages 583-609, June.
    17. Francesco Ciardiello & Andrea Genovese & Shucheng Luo & Antonino Sgalambro, 2023. "A game-theoretic multi-stakeholder model for cost allocation in urban consolidation centres," Annals of Operations Research, Springer, vol. 324(1), pages 663-686, May.
    18. Molenbruch, Yves & Braekers, Kris & Caris, An, 2017. "Benefits of horizontal cooperation in dial-a-ride services," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 107(C), pages 97-119.
    19. Cleophas, Catherine & Cottrill, Caitlin & Ehmke, Jan Fabian & Tierney, Kevin, 2019. "Collaborative urban transportation: Recent advances in theory and practice," European Journal of Operational Research, Elsevier, vol. 273(3), pages 801-816.
    20. Jessica Rodríguez‐Pereira & Burcu Balcik & Marie‐Ève Rancourt & Gilbert Laporte, 2021. "A Cost‐Sharing Mechanism for Multi‐Country Partnerships in Disaster Preparedness," Production and Operations Management, Production and Operations Management Society, vol. 30(12), pages 4541-4565, December.
    21. Guajardo, Mario & Rönnqvist, Mikael & Flisberg, Patrik & Frisk, Mikael, 2018. "Collaborative transportation with overlapping coalitions," European Journal of Operational Research, Elsevier, vol. 271(1), pages 238-249.

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