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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
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    References listed on IDEAS

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