Transportation service sharing and replenishment/delivery scheduling in Supply Hub in Industrial Park (SHIP)

Xuan Qiu and George Q. Huang

International Journal of Production Economics, 2016, vol. 175, issue C, 109-120

Abstract: It becomes increasingly common for an industrial park to provide a supply hub for its member enterprises to share transportation services by dispatching vehicles to circulate multiple manufacturers to cover their delivery requirements. This paper discusses an interactive decision making problem between a Supply Hub in Industrial Park (SHIP) and its member enterprises in transportation service sharing. This problem is modeled as a bilevel program with the SHIP as the leader and manufacturers as followers. The optimal characteristics of the proposed model are analysed, and an algorithm is developed to solve the model. For comparison, a bilevel analytical model is constructed for the problem with direct transportation service. A numerical study is conducted to examine the influence of major parameters and evaluate the value of sharing transportation service. The results show that SHIP׳s profit will not always increase with the vehicle capacity. Contrary to intuition, manufacturers are found to keep their replenishment and delivery schedules constant when their holding cost rates are high. Compared with direct transportation, SHIP offers a lower delivery price and more frequent delivery service under shared transportation. Sharing transportation service could bring benefits to both SHIP and manufacturers.

Keywords: Supply hub; Industrial park; Milk-run logistics; Bilevel programming (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:proeco:v:175:y:2016:i:c:p:109-120

DOI: 10.1016/j.ijpe.2016.02.002

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