IDEAS home Printed from https://ideas.repec.org/a/eee/transe/v191y2024ics1366554524003314.html
   My bibliography  Save this article

A choice-driven service network design and pricing including heterogeneous behaviors

Author

Listed:
  • Nicolet, Adrien
  • Atasoy, Bilge

Abstract

The design and pricing of services are two of the most important decisions faced by any intermodal transport operator. The key success factor lies in the ability to meet the needs of the shippers. Therefore, making full use of the available information about the demand helps to come up with good design and pricing decisions. With this in mind, we propose a Choice-Driven approach, incorporating advanced choice models directly into a Service Network Design and Pricing problem. We evaluate this approach considering both deterministic and stochastic choice models. To reduce the computational time for the stochastic instances, we propose a predetermination heuristic. The proposed models are compared to a benchmark, where shippers are solely cost-minimizers. Results show that the operator’s profits can be significantly improved, even with deterministic models. The stochastic versions further increase the realized profits: in particular, considering shippers’ heterogeneity allows a better estimation of the demand.

Suggested Citation

  • Nicolet, Adrien & Atasoy, Bilge, 2024. "A choice-driven service network design and pricing including heterogeneous behaviors," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 191(C).
    • Handle: RePEc:eee:transe:v:191:y:2024:i:c:s1366554524003314
    DOI: 10.1016/j.tre.2024.103740
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1366554524003314
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.tre.2024.103740?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
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Pacheco Paneque, Meritxell & Bierlaire, Michel & Gendron, Bernard & Sharif Azadeh, Shadi, 2021. "Integrating advanced discrete choice models in mixed integer linear optimization," Transportation Research Part B: Methodological, Elsevier, vol. 146(C), pages 26-49.
    2. Duan, Liwei & Tavasszy, Lorant A. & Rezaei, Jafar, 2019. "Freight service network design with heterogeneous preferences for transport time and reliability," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 124(C), pages 1-12.
    3. 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).
    4. Schlicher, Loe & Lurkin, Virginie, 2022. "Stable allocations for choice-based collaborative price setting," European Journal of Operational Research, Elsevier, vol. 302(3), pages 1242-1254.
    5. Shah, Nilopa & Brueckner, Jan K., 2012. "Price and frequency competition in freight transportation," Transportation Research Part A: Policy and Practice, Elsevier, vol. 46(6), pages 938-953.
    6. Li Li & Sridhar Tayur, 2005. "Medium-Term Pricing and Operations Planning in Intermodal Transportation," Transportation Science, INFORMS, vol. 39(1), pages 73-86, February.
    7. Rich, J. & Holmblad, P.M. & Hansen, C.O., 2009. "A weighted logit freight mode-choice model," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 45(6), pages 1006-1019, November.
    8. Lüer-Villagra, Armin & Marianov, Vladimir, 2013. "A competitive hub location and pricing problem," European Journal of Operational Research, Elsevier, vol. 231(3), pages 734-744.
    9. Ypsilantis, P. & Zuidwijk, R.A., 2013. "Joint Design and Pricing of Intermodal Port - Hinterland Network Services: Considering Economies of Scale and Service Time Constraints," ERIM Report Series Research in Management ERS-2013-011-LIS, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.
    10. Wang, David Z.W. & Lo, Hong K., 2008. "Multi-fleet ferry service network design with passenger preferences for differential services," Transportation Research Part B: Methodological, Elsevier, vol. 42(9), pages 798-822, November.
    11. Zetina, Carlos Armando & Contreras, Ivan & Cordeau, Jean-François, 2019. "Profit-oriented fixed-charge network design with elastic demand," Transportation Research Part B: Methodological, Elsevier, vol. 127(C), pages 1-19.
    12. Luce Brotcorne & Martine Labbé & Patrice Marcotte & Gilles Savard, 2008. "Joint Design and Pricing on a Network," Operations Research, INFORMS, vol. 56(5), pages 1104-1115, October.
    13. Teypaz, Nicolas & Schrenk, Susann & Cung, Van-Dat, 2010. "A decomposition scheme for large-scale Service Network Design with asset management," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 46(1), pages 156-170, January.
    14. Tawfik, Christine & Gendron, Bernard & Limbourg, Sabine, 2022. "An iterative two-stage heuristic algorithm for a bilevel service network design and pricing model," European Journal of Operational Research, Elsevier, vol. 300(2), pages 512-526.
    15. Christine Tawfik & Sabine Limbourg, 2018. "Pricing Problems in Intermodal Freight Transport: Research Overview and Prospects," Sustainability, MDPI, vol. 10(9), pages 1-22, September.
    16. J Andersen & M Christiansen, 2009. "Designing new European rail freight services," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 60(3), pages 348-360, March.
    17. Hartleb, J. & Schmidt, M.E. & Huisman, D. & Friedrich, M., 2021. "Modeling and solving line planning with integrated mode choice," ERIM Report Series Research in Management ERS-2021-005-LIS, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.
    18. Arencibia, Ana Isabel & Feo-Valero, María & García-Menéndez, Leandro & Román, Concepción, 2015. "Modelling mode choice for freight transport using advanced choice experiments," Transportation Research Part A: Policy and Practice, Elsevier, vol. 75(C), pages 252-267.
    19. Elbert, R. & Müller, J. P. & Rentschler, J., 2020. "Tactical network planning and design in multimodal transportation – A systematic literature review," Publications of Darmstadt Technical University, Institute for Business Studies (BWL) 120617, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL).
    20. Macharis, C. & Bontekoning, Y. M., 2004. "Opportunities for OR in intermodal freight transport research: A review," European Journal of Operational Research, Elsevier, vol. 153(2), pages 400-416, March.
    21. Crainic, Teodor Gabriel, 2000. "Service network design in freight transportation," European Journal of Operational Research, Elsevier, vol. 122(2), pages 272-288, April.
    22. Zhang, Qi & Wang, Wenyuan & Peng, Yun & Zhang, Junyi & Guo, Zijian, 2018. "A game-theoretical model of port competition on intermodal network and pricing strategy," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 114(C), pages 19-39.
    23. Wang, Zhenjie & Zhang, Dezhi & Tavasszy, Lóránt & Fazi, Stefano, 2023. "Integrated multimodal freight service network design and pricing with a competing service integrator and heterogeneous shipper classes," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 179(C).
    24. Taherkhani, Gita & Bilegan, Ioana C. & Crainic, Teodor Gabriel & Gendreau, Michel & Rei, Walter, 2022. "Tactical capacity planning in an integrated multi-stakeholder freight transportation system," Omega, Elsevier, vol. 110(C).
    25. François Combes, 2013. "On Shipment Size and Freight Tariffs Technical Constraints and Equilibrium Prices," Journal of Transport Economics and Policy, University of Bath, vol. 47(2), pages 229-243, May.
    26. Bilegan, Ioana C. & Crainic, Teodor Gabriel & Wang, Yunfei, 2022. "Scheduled service network design with revenue management considerations and an intermodal barge transportation illustration," European Journal of Operational Research, Elsevier, vol. 300(1), pages 164-177.
    27. Zhang, Yue, 2015. "Designing a retail store network with strategic pricing in a competitive environment," International Journal of Production Economics, Elsevier, vol. 159(C), pages 265-273.
    28. Martin, Florian & Hemmelmayr, Vera C. & Wakolbinger, Tina, 2021. "Integrated express shipment service network design with customer choice and endogenous delivery time restrictions," European Journal of Operational Research, Elsevier, vol. 294(2), pages 590-603.
    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. Wang, Zhenjie & Zhang, Dezhi & Tavasszy, Lóránt & Fazi, Stefano, 2023. "Integrated multimodal freight service network design and pricing with a competing service integrator and heterogeneous shipper classes," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 179(C).
    2. Christine Tawfik & Sabine Limbourg, 2019. "A Bilevel Model for Network Design and Pricing Based on a Level-of-Service Assessment," Transportation Science, INFORMS, vol. 53(6), pages 1609-1626, November.
    3. Martin, Florian & Hemmelmayr, Vera C. & Wakolbinger, Tina, 2021. "Integrated express shipment service network design with customer choice and endogenous delivery time restrictions," European Journal of Operational Research, Elsevier, vol. 294(2), pages 590-603.
    4. Bilegan, Ioana C. & Crainic, Teodor Gabriel & Wang, Yunfei, 2022. "Scheduled service network design with revenue management considerations and an intermodal barge transportation illustration," European Journal of Operational Research, Elsevier, vol. 300(1), pages 164-177.
    5. Christine Tawfik & Sabine Limbourg, 2018. "Pricing Problems in Intermodal Freight Transport: Research Overview and Prospects," Sustainability, MDPI, vol. 10(9), pages 1-22, September.
    6. Li, Siqiao & Zhu, Xiaoning & Shang, Pan & Li, Tianqi & Liu, Wenqian, 2023. "Optimizing a shared freight and passenger high-speed railway system: A multi-commodity flow formulation with Benders decomposition solution approach," Transportation Research Part B: Methodological, Elsevier, vol. 172(C), pages 1-31.
    7. Thibault Delbart & Yves Molenbruch & Kris Braekers & An Caris, 2021. "Uncertainty in Intermodal and Synchromodal Transport: Review and Future Research Directions," Sustainability, MDPI, vol. 13(7), pages 1-25, April.
    8. Satici, Ozgur & Dayarian, Iman, 2024. "Tactical and operational planning of express intra-city package services," Omega, Elsevier, vol. 122(C).
    9. Chen, Rui & Jia, Shuai & Meng, Qiang, 2023. "Dynamic container drayage booking and routing decision support approach for E-commerce platforms," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 177(C).
    10. Tamannaei, Mohammad & Zarei, Hamid & Rasti-Barzoki, Morteza, 2021. "A game theoretic approach to sustainable freight transportation: Competition between road and intermodal road–rail systems with government intervention," Transportation Research Part B: Methodological, Elsevier, vol. 153(C), pages 272-295.
    11. Yiting Xing & Ling Li & Zhuming Bi & Marzena Wilamowska‐Korsak & Li Zhang, 2013. "Operations Research (OR) in Service Industries: A Comprehensive Review," Systems Research and Behavioral Science, Wiley Blackwell, vol. 30(3), pages 300-353, May.
    12. Akgün, İbrahim & Özkil, Altan & Gören, Selçuk, 2020. "A multimodal, multicommodity, and multiperiod planning problem for coal distribution to poor families," Socio-Economic Planning Sciences, Elsevier, vol. 72(C).
    13. Numa-Navarro, Ian & Wilmsmeier, Gordon & Gil, Cristiam, 2023. "Improving empty container management using street-turn: A case study of the Colombian logistics network," Journal of Transport Geography, Elsevier, vol. 112(C).
    14. Panagiotis Ypsilantis & Rob Zuidwijk, 2019. "Collaborative Fleet Deployment and Routing for Sustainable Transport," Sustainability, MDPI, vol. 11(20), pages 1-26, October.
    15. Paraskevopoulos, Dimitris C. & Gürel, Sinan & Bektaş, Tolga, 2016. "The congested multicommodity network design problem," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 85(C), pages 166-187.
    16. Jiang, Xiaodan & Fan, Houming & Luo, Meifeng & Xu, Zhenlin, 2020. "Strategic port competition in multimodal network development considering shippers’ choice," Transport Policy, Elsevier, vol. 90(C), pages 68-89.
    17. Jian Zhou & Kexin Xu & Yuxiu Zhao & Haoran Zheng & Zhengnan Dong, 2021. "Hub-and-Spoke Logistics Network Considering Pricing and Co-Opetition," Sustainability, MDPI, vol. 13(17), pages 1-21, September.
    18. Chia-Nan Wang & Thanh-Tuan Dang & Tran Quynh Le & Panitan Kewcharoenwong, 2020. "Transportation Optimization Models for Intermodal Networks with Fuzzy Node Capacity, Detour Factor, and Vehicle Utilization Constraints," Mathematics, MDPI, vol. 8(12), pages 1-27, November.
    19. G Lulli & U Pietropaoli & N Ricciardi, 2011. "Service network design for freight railway transportation: the Italian case," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 62(12), pages 2107-2119, December.
    20. Mejía, Gonzalo & Aránguiz, Raúl & Espejo-Díaz, Julián Alberto & Granados-Rivera, Daniela & Mejía-Argueta, Christopher, 2023. "Can street markets be a sustainable strategy to mitigate food insecurity in emerging countries? Insights from a competitive facility location model," Socio-Economic Planning Sciences, Elsevier, vol. 86(C).

    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:eee:transe:v:191:y:2024:i:c:s1366554524003314. 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: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/600244/description#description .

    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.