The cooperative facility location problem

Abstract

In order to survive under the ever increasing pressure to operate more efficiently, transportation organisations are obliged to adopt a collaborative focus. One approach to horizontal carrier collaboration is the sharing of warehouses or distribution centres with partnering companies. In this context, this paper develops a mathematical formulation for the cooperative facility location problem and demonstrates the benefits of joint optimisation by means of a case study. In addition, total logistics costs are fairly allocated with the use of Shapley value in order to ensure cooperation stability.