Analysing the effects of cost allocation methods for the cooperative facility location problem

Abstract

Transportation companies operating at the same level of the supply chain may cooperate horizontally to increase their efficiency levels. One approach to horizontal carrier collaboration is the sharing of warehouses or distribution centres with partnering organizations. This problem may be classified as the cooperative facility location problem and can be formulated as a MILP. To demonstrate the benefits of collaborative optimisation, the cooperation potential of a U.K. case study is examined. In addition, the effects of three cost allocation techniques are analysed and compared.