IDEAS home Printed from https://ideas.repec.org/a/inm/ortrsc/v50y2016i1p275-287.html
   My bibliography  Save this article

An Airfreight Forwarder’s Shipment Bidding and Logistics Planning

Author

Listed:
  • Lawrence C. Leung

    (Department of Decision Sciences and Managerial Economics, Chinese University of Hong Kong, Hong Kong)

  • Gang Chen

    (Department of Logistics Engineering and Management, Sun Yat-sen University, 510275 Guangzhou, China)

  • Yer Van Hui

    (Department of Management Sciences, City University of Hong Kong, Kowloon, Hong Kong)

  • Wen He

    (School of Business Administration, Hunan University, 410000 Changsha, China)

Abstract

Today many web-based logistics platforms exist, enabling logistics agents worldwide to interact and form collaborations in an effective manner. In particular, some advanced e-platforms support online bidding of shipments. This paper integrates shipment bidding with logistics decisions. First, we formulate the shipment bidding and logistics planning model as a 0-1 mixed integer program, which addresses only buyout bids. Based on the properties of the model, we design a two-echelon solution procedure to search for the optimal shipment portfolio and the corresponding logistics requirements. We then extend the model to include placing either a buyout bid or an alternative bid for a new shipment with an estimated probability of success. The general model is formulated as a two-stage mixed 0-1 stochastic integer program, which allows forwarders to acquire some new jobs right away while placing alternative bids on others. The model is solved by modifying the two-echelon procedure. An illustrative example is included to highlight the significance of integrating shipment bidding with shipment logistics planning. Managerial issues are explored based on this example.

Suggested Citation

  • Lawrence C. Leung & Gang Chen & Yer Van Hui & Wen He, 2016. "An Airfreight Forwarder’s Shipment Bidding and Logistics Planning," Transportation Science, INFORMS, vol. 50(1), pages 275-287, February.
    • Handle: RePEc:inm:ortrsc:v:50:y:2016:i:1:p:275-287
    DOI: 10.1287/trsc.2015.0604
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1287/trsc.2015.0604
    Download Restriction: no
    File URL: https://libkey.io/10.1287/trsc.2015.0604?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Gendreau, Michel & Laporte, Gilbert & Seguin, Rene, 1996. "Stochastic vehicle routing," European Journal of Operational Research, Elsevier, vol. 88(1), pages 3-12, January.
    2. Caroe, Claus C. & Tind, Jorgen, 1997. "A cutting-plane approach to mixed 0-1 stochastic integer programs," European Journal of Operational Research, Elsevier, vol. 101(2), pages 306-316, September.
    3. Fred Glover, 1990. "Tabu Search: A Tutorial," Interfaces, INFORMS, vol. 20(4), pages 74-94, August.
    4. Wong, Wai Hung & Leung, Lawrence C. & Hui, Yer Van, 2009. "Airfreight forwarder shipment planning: A mixed 0-1 model and managerial issues in the integration and consolidation of shipments," European Journal of Operational Research, Elsevier, vol. 193(1), pages 86-97, February.
    5. Hau L. Lee & Corey Billington, 1995. "The Evolution of Supply-Chain-Management Models and Practice at Hewlett-Packard," Interfaces, INFORMS, vol. 25(5), pages 42-63, October.
    6. Trukhanov, Svyatoslav & Ntaimo, Lewis & Schaefer, Andrew, 2010. "Adaptive multicut aggregation for two-stage stochastic linear programs with recourse," European Journal of Operational Research, Elsevier, vol. 206(2), pages 395-406, October.
    7. Bookbinder, James H. & Higginson, James K., 2002. "Probabilistic modeling of freight consolidation by private carriage," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 38(5), pages 305-318, September.
    8. Michel Gendreau & Gilbert Laporte & René Séguin, 1996. "A Tabu Search Heuristic for the Vehicle Routing Problem with Stochastic Demands and Customers," Operations Research, INFORMS, vol. 44(3), pages 469-477, June.
    9. Tatsiana Levina & Yuri Levin & Jeff McGill & Mikhail Nediak, 2011. "Network Cargo Capacity Management," Operations Research, INFORMS, vol. 59(4), pages 1008-1023, August.
    10. Lewis Ntaimo, 2010. "Disjunctive Decomposition for Two-Stage Stochastic Mixed-Binary Programs with Random Recourse," Operations Research, INFORMS, vol. 58(1), pages 229-243, February.
    11. Tyan, Jonah C. & Wang, Fu-Kwun & Du, Timon C., 2003. "An evaluation of freight consolidation policies in global third party logistics," Omega, Elsevier, vol. 31(1), pages 55-62, February.
    12. Lokketangen, Arne & Glover, Fred, 1998. "Solving zero-one mixed integer programming problems using tabu search," European Journal of Operational Research, Elsevier, vol. 106(2-3), pages 624-658, April.
    13. Lawrence C. Leung & Yer Van Hui & Yong Wang & Gang Chen, 2009. "A 0--1 LP Model for the Integration and Consolidation of Air Cargo Shipments," Operations Research, INFORMS, vol. 57(2), pages 402-412, April.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Wong, Wai Hung & Leung, Lawrence C. & Hui, Yer Van, 2009. "Airfreight forwarder shipment planning: A mixed 0-1 model and managerial issues in the integration and consolidation of shipments," European Journal of Operational Research, Elsevier, vol. 193(1), pages 86-97, February.
    2. Leung, Lawrence C. & Wong, Wai Hung & Hui, Yer Van & Wan, Yulai, 2013. "Managing third-party logistics under uncertainty: A decision scheme and managerial implications," International Journal of Production Economics, Elsevier, vol. 145(2), pages 630-644.
    3. Goodson, Justin C. & Ohlmann, Jeffrey W. & Thomas, Barrett W., 2012. "Cyclic-order neighborhoods with application to the vehicle routing problem with stochastic demand," European Journal of Operational Research, Elsevier, vol. 217(2), pages 312-323.
    4. Lars M. Hvattum & Arne Løkketangen & Gilbert Laporte, 2006. "Solving a Dynamic and Stochastic Vehicle Routing Problem with a Sample Scenario Hedging Heuristic," Transportation Science, INFORMS, vol. 40(4), pages 421-438, November.
    5. Florent Hernandez & Michel Gendreau & Ola Jabali & Walter Rei, 2019. "A local branching matheuristic for the multi-vehicle routing problem with stochastic demands," Journal of Heuristics, Springer, vol. 25(2), pages 215-245, April.
    6. Almeder, Christian & Hartl, Richard F., 2013. "A metaheuristic optimization approach for a real-world stochastic flexible flow shop problem with limited buffer," International Journal of Production Economics, Elsevier, vol. 145(1), pages 88-95.
    7. Satır, Benhür & Erenay, Fatih Safa & Bookbinder, James H., 2018. "Shipment consolidation with two demand classes: Rationing the dispatch capacity," European Journal of Operational Research, Elsevier, vol. 270(1), pages 171-184.
    8. Chiang, Wen-Chyuan & Russell, Robert & Xu, Xiaojing & Zepeda, David, 2009. "A simulation/metaheuristic approach to newspaper production and distribution supply chain problems," International Journal of Production Economics, Elsevier, vol. 121(2), pages 752-767, October.
    9. Tan, K.C. & Cheong, C.Y. & Goh, C.K., 2007. "Solving multiobjective vehicle routing problem with stochastic demand via evolutionary computation," European Journal of Operational Research, Elsevier, vol. 177(2), pages 813-839, March.
    10. Jinil Han & Chungmok Lee & Sungsoo Park, 2014. "A Robust Scenario Approach for the Vehicle Routing Problem with Uncertain Travel Times," Transportation Science, INFORMS, vol. 48(3), pages 373-390, August.
    11. Angel A. Juan & Peter Keenan & Rafael Martí & Seán McGarraghy & Javier Panadero & Paula Carroll & Diego Oliva, 2023. "A review of the role of heuristics in stochastic optimisation: from metaheuristics to learnheuristics," Annals of Operations Research, Springer, vol. 320(2), pages 831-861, January.
    12. Kulak, Osman & Genç, Atakan & Taner, Mustafa Egemen, 2018. "A decision making tool considering risk assessment of sub-contracting agents for an air cargo shipment planning problem," Journal of Air Transport Management, Elsevier, vol. 69(C), pages 123-136.
    13. Lin, Yu-Min & Fang, Shu-Cherng & Thorne, Jeffrey L., 2007. "A tabu search algorithm for maximum parsimony phylogeny inference," European Journal of Operational Research, Elsevier, vol. 176(3), pages 1908-1917, February.
    14. Onur Tavaslıoğlu & Oleg A. Prokopyev & Andrew J. Schaefer, 2019. "Solving Stochastic and Bilevel Mixed-Integer Programs via a Generalized Value Function," Operations Research, INFORMS, vol. 67(6), pages 1659-1677, November.
    15. Felipe, Angel & Teresa Ortuño, M. & Tirado, Gregorio, 2011. "Using intermediate infeasible solutions to approach vehicle routing problems with precedence and loading constraints," European Journal of Operational Research, Elsevier, vol. 211(1), pages 66-75, May.
    16. Hui, Yer Van & Gao, Jia & Leung, Lawrence & Wallace, Stein, 2014. "Airfreight forwarder’s shipment planning under uncertainty: A two-stage stochastic programming approach," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 66(C), pages 83-102.
    17. Li, Xiangyong & Tian, Peng & Leung, Stephen C.H., 2010. "Vehicle routing problems with time windows and stochastic travel and service times: Models and algorithm," International Journal of Production Economics, Elsevier, vol. 125(1), pages 137-145, May.
    18. Pan, Shenle & Ballot, Eric & Fontane, Frédéric, 2013. "The reduction of greenhouse gas emissions from freight transport by pooling supply chains," International Journal of Production Economics, Elsevier, vol. 143(1), pages 86-94.
    19. Russell W. Bent & Pascal Van Hentenryck, 2004. "Scenario-Based Planning for Partially Dynamic Vehicle Routing with Stochastic Customers," Operations Research, INFORMS, vol. 52(6), pages 977-987, December.
    20. Albareda-Sambola, Maria & Fernandez, Elena & Laporte, Gilbert, 2007. "Heuristic and lower bound for a stochastic location-routing problem," European Journal of Operational Research, Elsevier, vol. 179(3), pages 940-955, June.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:inm:ortrsc:v:50:y:2016:i:1:p:275-287. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Asher (email available below). General contact details of provider: https://edirc.repec.org/data/inforea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.