| Article ID: | iaor20164365 |
| Volume: | 50 |
| Issue: | 1 |
| Start Page Number: | 275 |
| End Page Number: | 287 |
| Publication Date: | Feb 2016 |
| Journal: | Transportation Science |
| Authors: | Chen Gang, Van Hui Yer, Leung Lawrence C, He Wen |
| Keywords: | transportation: air, internet, e-commerce, stochastic processes |
Today many web‐based logistics platforms exist, enabling logistics agents worldwide to interact and form collaborations in an effective manner. In particular, some advanced e‐platforms support online bidding of shipments. This paper integrates shipment bidding with logistics decisions. First, we formulate the shipment bidding and logistics planning model as a 0‐1 mixed integer program, which addresses only buyout bids. Based on the properties of the model, we design a two‐echelon solution procedure to search for the optimal shipment portfolio and the corresponding logistics requirements. We then extend the model to include placing either a buyout bid or an alternative bid for a new shipment with an estimated probability of success. The general model is formulated as a two‐stage mixed 0‐1 stochastic integer program, which allows forwarders to acquire some new jobs right away while placing alternative bids on others. The model is solved by modifying the two‐echelon procedure. An illustrative example is included to highlight the significance of integrating shipment bidding with shipment logistics planning. Managerial issues are explored based on this example.