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Cost allocation in collaborative forest transportation

Author

Listed:
  • 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)

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.

Suggested Citation

  • Frisk, Mikael & Göthe-Lundgren, Maud & Jörnsten, Kurt & Rönnqvist, Mikael, 2006. "Cost allocation in collaborative forest transportation," Discussion Papers 2006/15, Norwegian School of Economics, Department of Business and Management Science.
  • Handle: RePEc:hhs:nhhfms:2006_015
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    File URL: http://hdl.handle.net/11250/163868
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    References listed on IDEAS

    as
    1. Tijs, S.H. & Driessen, T.S.H., 1986. "Game theory and cost allocation problems," Other publications TiSEM 376c24c5-c95d-4d29-96b6-4, Tilburg University, School of Economics and Management.
    2. Lemaire, Jean, 1984. "An Application of Game Theory: Cost Allocation," ASTIN Bulletin: The Journal of the International Actuarial Association, Cambridge University Press, vol. 14(01), pages 61-81, April.
    3. S. H. Tijs & T. S. H. Driessen, 1986. "Game Theory and Cost Allocation Problems," Management Science, INFORMS, vol. 32(8), pages 1015-1028, August.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

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

    JEL classification:

    • L91 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Transportation: General
    • Q21 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Demand and Supply; Prices
    • Q23 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Forestry

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