The Shippers' Collaboration with Shipment Consolidation

In this thesis, we first study the problem of shipment consolidation in less-than-truckload transportation. The transportation cost has an incremental discount structure and a fixed cost. We model the problem as a minimum concave cost network flow problem, and linearize the cost function. Then, we develop a primal approximation algorithm and solve the Lagrangian dual optimum to estimate the optimality gap. We model the problem as a cooperative game. We first develop a linearization model and show that a cost allocation rule based on duality is in the core if the integrality gap of the linearization model is zero. We find conditions for a proportional rule to be in the core. The computation of these two rules is not efficient, thus we design a rule using the Lagrangian dual optimum and an approximate proportional rule using a primal local optimum. The Lagrangian dual rules are stable and has a small relative underallocation. Our computational experiments show that the approximation algorithm can effectively find the global optimum and the underallocation of Lagrangian dual rules is usually less than 1% and even less than 0.1% in tree-structure and large-scale networks.;Second, we study the shippers' collaboration on production-shipping schedule planning integrated with shipment consolidation. We characterize the optimal production-shipping schedule and develop an enumeration algorithm and an approximation algorithm using a DLS network. We use a linearization model and its dual to characterize the core and then study the dual rule and proportional rule. When the shippers do not share their production and inventory cost information and only cooperate in shipment consolidation, we study a biform game for hub-spoke logistics networks and show that a pure-strategy Bayesian equilibrium exists under a sufficient condition. Computational experiments show that the cooperation outcome and the efficiency loss from private information are sensitive the shippers' ratios of setup cost vs inventory holding cost; when this ratio is heterogeneous among the shippers, the efficiency loss may be large and the cooperation benefits to the shippers are small when the shippers cooperate in transportation only.