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A Performance Agreement To Align The Operation Of A Loading Dock And A Fleet

Author

Listed:
  • PATRICIO DONOSO

    (Escuela de Administración, Pontificia Universidad Católica de Chile)

  • MARCOS SINGER

    (Escuela de Administración, Pontificia Universidad Católica de Chile)

  • ALAN SCHELLER-WOLF

    (Graduate School of Industrial Administration, Carnegie Mellon University)

Abstract

This article examines a company whose distribution operation is carried out by a loading Dock and a Fleet of trucks. For a number of reasons, each department optimizes its operation locally, with no concern for the operational alignment of the overall system. To resolve this problem, a contract is proposed that will provide an incentive for improved operations, particularly at the loading Dock. The contract specifies a payment from the Fleet to the loading Dock calculated on the basis of a reduction in Fleet size made possible by improvements in the Dock operations. This methodology is applied to a mass consumption product distributing company in Santiago, Chile. Significant savings opportunities result, thanks to operational alignment.

Suggested Citation

  • Patricio Donoso & Marcos Singer & Alan Scheller-Wolf, 1998. "A Performance Agreement To Align The Operation Of A Loading Dock And A Fleet," Abante, Escuela de Administracion. Pontificia Universidad Católica de Chile., vol. 1(2), pages 167-188.
    • Handle: RePEc:pch:abante:v:1:y:1998:i:2:p:167-188
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    References listed on IDEAS

    as
    1. Yafeng Du & Randolph Hall, 1997. "Fleet Sizing and Empty Equipment Redistribution for Center-Terminal Transportation Networks," Management Science, INFORMS, vol. 43(2), pages 145-157, February.
    2. Patricio Donoso, 1998. "En Busca Del Alineamiento Operacional," Abante, Escuela de Administracion. Pontificia Universidad Católica de Chile., vol. 1(1), pages 33-58.
    3. Ronen, J & Mckinney, G, 1970. "Transfer Pricing For Divisional Autonomy," Journal of Accounting Research, Wiley Blackwell, vol. 8(1), pages 99-112.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Performance Agreement; Alignment; Fleet; Incentive; Transfer; Chile;
    All these keywords.

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis

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