Cost Allocation to Achieve Collaborative Transportation Solutions
Abstract:
Transportation planning is an important part of the supply chain or wood flow chain in forestry. There are often several forest companies operating in the same region and collaboration 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%. There are several issues to agree on before such collaborative planning can be used in practice. A key question is how the total cost or savings should be distributed among the participants. In this paper, we study a large application in southern Sweden with eight forest companies involved in a collaboration. We investigate a number of sharing mechanisms 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, with the aim that the participants relative profits are as equal as possible.
We also examine how collaboration can be achieved in a negotiation situation, when a number of companies in a specific industrial sector are potential partners. The aim is to achieve a collaboration involving as many companies as possible. We assume that a company accepts to participate in the collaboration if their transportation costs are reduced. We study how the negotiation process can be developed using the principle of insinking , as presented by Cruijssen et.al (2005)