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Incorporating Pricing Decisions into the Stochastic Dynamic Fleet Management Problem

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  • Huseyin Topaloglu

    (School of Operations Research and Industrial Engineering, Cornell University, Ithaca, New York 14853)

  • Warren Powell

    (Department of Operations Research and Financial Engineering, Princeton University, Princeton, New Jersey 08544)

Abstract

This paper shows how to coordinate the decisions on pricing and fleet management of a freight carrier. We consider a setting where the carrier announces its prices at the beginning of a certain time horizon and the load arrivals over this horizon depend on the announced prices. Assuming that the vehicle fleet is managed according to a particular class of fleet management models, we present a tractable method to obtain sample path-based directional derivatives of the objective function with respect to the prices. We use this information to search for a good set of prices. Numerical experiments show that our approach yields high-quality solutions.

Suggested Citation

  • Huseyin Topaloglu & Warren Powell, 2007. "Incorporating Pricing Decisions into the Stochastic Dynamic Fleet Management Problem," Transportation Science, INFORMS, vol. 41(3), pages 281-301, August.
    • Handle: RePEc:inm:ortrsc:v:41:y:2007:i:3:p:281-301
    DOI: 10.1287/trsc.1070.0196
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    References listed on IDEAS

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    2. Cristián E. Cortés & Doris Sáez & Alfredo Núñez & Diego Muñoz-Carpintero, 2009. "Hybrid Adaptive Predictive Control for a Dynamic Pickup and Delivery Problem," Transportation Science, INFORMS, vol. 43(1), pages 27-42, February.
    3. Kuyzu, Gültekin & Akyol, Çağla Gül & Ergun, Özlem & Savelsbergh, Martin, 2015. "Bid price optimization for truckload carriers in simultaneous transportation procurement auctions," Transportation Research Part B: Methodological, Elsevier, vol. 73(C), pages 34-58.
    4. Qiu, Xuan & Xu, Su Xiu & Xu, Gangyan, 2021. "Pricing and scheduling of barge hinterland transportation service for inbound containers," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 156(C).
    5. Zhou, Wei-Hua & Lee, Chung-Yee, 2009. "Pricing and competition in a transportation market with empty equipment repositioning," Transportation Research Part B: Methodological, Elsevier, vol. 43(6), pages 677-691, July.
    6. Felix Papier & Ulrich W. Thonemann, 2008. "Queuing Models for Sizing and Structuring Rental Fleets," Transportation Science, INFORMS, vol. 42(3), pages 302-317, August.
    7. Marlin W. Ulmer, 2020. "Dynamic Pricing and Routing for Same-Day Delivery," Transportation Science, INFORMS, vol. 54(4), pages 1016-1033, July.
    8. Liu, Yang & Xie, Jiaohong & Chen, Nan, 2022. "Stochastic one-way carsharing systems with dynamic relocation incentives through preference learning," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 166(C).
    9. Toptal, Aysegül & Bingöl, Safa Onur, 2011. "Transportation pricing of a truckload carrier," European Journal of Operational Research, Elsevier, vol. 214(3), pages 559-567, November.

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