Managing third-party logistics under uncertainty: A decision scheme and managerial implications

Lawrence C. Leung, Wai Hung Wong, Yer Van Hui and Yulai Wan

International Journal of Production Economics, 2013, vol. 145, issue 2, 630-644

Abstract: Airfreight forwarders design shipment plans to ensure that client shipments are delivered on time and at a low cost. Reliability of a shipment—the probability of delivering a shipment on time—is a critical consideration in shipment planning. We propose a three-phase decision scheme for forwarders to develop, evaluate, and revise their shipment plans, such that plans can meet reliability targets at a reasonably low cost. In phase one, a tentative shipment plan is determined using a Tabu algorithm. In phase two, the plan's reliability is examined by a simulation model. In phase three, we design specific actions to revise an unsatisfactory plan. To explore managerial implications of uncertainty in third-party logistics, we solved many cases of shipment plan using real-life air cargo routes and data. It is observed that consolidation—while saves cost—can have undesirable impact on shipment reliability as it allows uncertain elements of one shipment to affect another. Integration, although not as cost-efficient, enhances shipment reliability. Compared to results obtained from simulating industry practice, the proposed scheme is able to perform consistently better. Many issues of practical concern are discussed.

Keywords: Shipment planning; Consolidation; Integration; Simulation; Logistics; Airfreight forwarder (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0925527313002442
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:proeco:v:145:y:2013:i:2:p:630-644

DOI: 10.1016/j.ijpe.2013.05.017

Access Statistics for this article

International Journal of Production Economics is currently edited by Stefan Minner

More articles in International Journal of Production Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().