This grant provides funding for the development of methodology and technology to support effective inter-company logistics collaboration. Examples of such collaborations include collaboration between carriers with different transportation networks to provide integrated services to customers who need goods to be transported over more than one network between origins and destinations, such as collaboration between different rail networks and alliances between airlines and shipping lines, and collaboration between shippers to offer bundles of shipments to carriers that will reduce empty repositioning costs. Various sensitive and important issues have to be addressed to enable such collaboration, including the determination of what information should be shared and when it should be shared, and the determination of the rules according to which costs and benefits will be distributed between collaborators. For collaboration to be sustainable, all participants have to be better off under the collaborative arrangements, which places stringent requirements on the design of such arrangements. The researchers will investigate fundamental principles governing practical and sustainable logistics collaborations. Various collaborative arrangements will be investigated. These arrangements will be compared based on the existence of stable collaborations under each arrangement, and the impact of each on total welfare as well as the distribution of the welfare. In order to study various collaborative arrangements, problems will have to be solved that are computationally hard. Examples of these problems are deterministic and stochastic mathematical programs with equilibrium constraints. The researchers will develop new algorithms to solve these problems.
If successful, this research will lead to a comparison of collaborative arrangements and the establishment of guidelines for the design of such arrangements for various logistics applications. The results will provide insight into what information should be shared and when the information should be shared, what the value of the shared information is, and how costs and benefits should be distributed between collaborators for the collaboration to be beneficial to all participants. The research will lead to new algorithms and computational tools to solve the problems that arise in the design and operation of collaborative logistics. Successful completion of this research may be of value to users and providers of transportation services, and thus to the economy at large.
