The cooperative carrier facility location problem: Analysing collaborative savings and cost allocation techniques

Abstract

Transport companies may cooperate to increase their efficiency levels by e.g. the exchange of orders or vehicle capacity. In this paper a new approach to horizontal carrier collaboration is presented: the sharing of distribution centres (DCs) with partnering organisations. This problem may be classified as a cooperative facility location problem and formulated as an innovative mixed integer linear program (MILP). To ensure cooperation sustainability, collaborative costs need to be allocated fairly to the different participants. Numerical experiments based on experimental design are carried out on a U.K. case study in order to analyse the benefits of cooperative facility location and the effects of different cost allocation techniques.