Multi-Aspect Probability Model of Expected Profit Subject to Uncertainty for Managerial Decision-Making in Local Transport Problems

Martin Holubčík (), Lukáš Falát, Jakub Soviar and Juraj Dubovec
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Martin Holubčík: Faculty of Management Science and Informatics, University of Žilina, 01026 Žilina, Slovakia
Lukáš Falát: Faculty of Management Science and Informatics, University of Žilina, 01026 Žilina, Slovakia
Jakub Soviar: Faculty of Management Science and Informatics, University of Žilina, 01026 Žilina, Slovakia
Juraj Dubovec: Faculty of Management Science and Informatics, University of Žilina, 01026 Žilina, Slovakia

Logistics, 2025, vol. 9, issue 1, 1-27

Abstract: Background : Governments face critical decisions regarding road remediation projects, requiring careful economic evaluation, especially in countries like Slovakia where road infrastructure is crucial for attracting foreign investment. These decisions are complex, involving short-term and long-term costs and revenues, along with inherent uncertainty about future outcomes. Traditional economic assessments often fail to capture the full scope of these factors, potentially leading to suboptimal choices. Methods : This study proposes four probability-based models: the Short-term Model (SM), Long-term-Short-term Model (LSM), Social Long-term-Short-term Model (SLSM), and Long-term-Short-term Model with a Time Aspect (TLSM). These models incorporate probabilistic functions to calculate expected costs and profits, considering various factors such as reparation costs, financial compensations, social costs, and time-related costs, as well as long-term benefits like increased investment and lives saved. Results : The proposed models were partially validated through an ex post analysis of a past road remediation project on road 1/18 (E50) under the Strecno castle cliff in Slovakia. The analysis demonstrated the models’ utility for multi-criteria decision-making in transportation problems, highlighting their ability to capture the complex interplay of economic and societal factors. Conclusions : The models enable governments to maximize societal benefit while mitigating potential risks, contributing to a more sustainable and efficient transportation sector. Future research could focus on refining the models and adapting them to other sectors beyond transportation.

Keywords: transport problems; managerial decision-making; multi-criteria model; cost–benefit analysis; expected profit; uncertainty; road remediation; economic efficiency; societal benefit; Slovakia (search for similar items in EconPapers)
JEL-codes: L8 L80 L81 L86 L87 L9 L90 L91 L92 L93 L98 L99 M1 M10 M11 M16 M19 R4 R40 R41 R49 (search for similar items in EconPapers)
Date: 2025
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