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A Bilevel Model for Network Design and Pricing Based on a Level-of-Service Assessment

Author

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  • Christine Tawfik

    (QuantOM, HEC Management School, University of Liege, 4000 Liege, Belgium)

  • Sabine Limbourg

    (Mathematical Optimization Methods, Zuse Institute Berlin, 14195 Berlin, Germany)

Abstract

Within a wide view to stimulate intermodal transport, this paper is devoted to the examination of the intrinsically related problems of designing freight carrying services and determining their associated prices as observed by the shipper firms. A path-based multicommodity formulation is developed for a medium-term planning horizon, from the perspective of an intermodal operator. In the quest of incorporating nonprice attributes, two approaches are proposed to depict a realistic assessment of the service quality. First, frequency delay constraints are added to the upper-level problem. Second, based on a random utility model, behavioral concepts are integrated in the expression of the lower level as a logistics costs minimization problem. Exact tests are invoked on real-world instances, demonstrating the capability of the presented approaches of reaching reasonable results within acceptable computation times and optimality gaps. The broader level-of-service perspective imposes additional costs on the service providers, although to a lesser extent on long-distance freight corridors, as indicated by the computed market share and net profit. Further experiments are conducted to test the impact of certain transport management instruments (e.g., subsidies and service capacities) on the modal split, as well as to assess the intermodality’s future based on a scenario analysis methodology.

Suggested Citation

  • 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.
  • Handle: RePEc:inm:ortrsc:v:53:y:2019:i:6:p:1609-1626
    DOI: 10.1287/trsc.2019.0906
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    References listed on IDEAS

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    2. 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.
    3. 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.
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    5. 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).

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