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Aggregate–disaggregate approach to an airfreight forwarder’s planning under uncertainty: a case study

Author

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  • Lawrence C. Leung

    (Chinese University of Hong Kong)

  • Yer Van Hui

    (City University of Hong Kong)

  • Gang Chen

    (Sun Yat-sen University)

  • Wai Hung Wong

    (Hang Seng Management College)

Abstract

Resource planning of airfreight forwarders is a complex endeavor, requiring decisions to be made in a dynamic and uncertain environment. Airfreight forwarders acquire airfreight spaces from three sources: allotment from carriers, retail from carriers and subcontracting to partners, all of which differ in terms of cost, flexibility and timing of booking. This real-life problem has many planning decisions (bookings in terms of carriers, route, time, ULDs, etc.). In this case study, we propose an aggregate–disaggregate approach and focus on the most critical decisions. A two-stage stochastic dynamic program first determines, in aggregates, the amount of allotment bookings, retail resources, and subcontracting or surplus co-loading. Then, a heuristic is used to disaggregate resource requirements into specific bookings. An analysis is provided to examine the relevant managerial issues. Based on real-life data, we show several patterns of aggregate resource bookings with respect to different levels of demand uncertainty and cost parameters. We show that resource disaggregation has to balance cost-effectiveness, capacity flexibility and routing flexibility of a resource plan.

Suggested Citation

  • Lawrence C. Leung & Yer Van Hui & Gang Chen & Wai Hung Wong, 2017. "Aggregate–disaggregate approach to an airfreight forwarder’s planning under uncertainty: a case study," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 68(6), pages 695-710, June.
    • Handle: RePEc:pal:jorsoc:v:68:y:2017:i:6:d:10.1057_s41274-016-0124-0
    DOI: 10.1057/s41274-016-0124-0
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    References listed on IDEAS

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    1. Lawrence C. Leung & Yer Van Hui & Yong Wang & Gang Chen, 2009. "A 0--1 LP Model for the Integration and Consolidation of Air Cargo Shipments," Operations Research, INFORMS, vol. 57(2), pages 402-412, April.
    2. Wong, Wai Hung & Leung, Lawrence C. & Hui, Yer Van, 2009. "Airfreight forwarder shipment planning: A mixed 0-1 model and managerial issues in the integration and consolidation of shipments," European Journal of Operational Research, Elsevier, vol. 193(1), pages 86-97, February.
    3. Kannapha Amaruchkul & William L. Cooper & Diwakar Gupta, 2007. "Single-Leg Air-Cargo Revenue Management," Transportation Science, INFORMS, vol. 41(4), pages 457-469, November.
    4. Tang, Ou & Grubbstrom, Robert W., 2002. "Planning and replanning the master production schedule under demand uncertainty," International Journal of Production Economics, Elsevier, vol. 78(3), pages 323-334, August.
    5. Yuan, Xue-Ming & Low, Joyce M.W. & Ching Tang, Loon, 2010. "Roles of the airport and logistics services on the economic outcomes of an air cargo supply chain," International Journal of Production Economics, Elsevier, vol. 127(2), pages 215-225, October.
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    Cited by:

    1. Bombelli, Alessandro & Fazi, Stefano, 2022. "The ground handler dock capacitated pickup and delivery problem with time windows: A collaborative framework for air cargo operations," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 159(C).

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