A Study of Demand Stochasticity in Service Network Design

Arnt-Gunnar Lium (), Teodor Gabriel Crainic () and Stein Wallace
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Arnt-Gunnar Lium: Molde University College, NO-6402 Molde, Norway
Teodor Gabriel Crainic: Département de Management et Technologie, École des Sciences de la Gestion, and Interuniversity Research Centre on Enterprise Networks, Logistics, and Transportation (CIRRELT), Université du Québec à Montréal, Centre-ville, Montréal, Québec H3C 3P8, Canada

Transportation Science, 2009, vol. 43, issue 2, 144-157

Abstract: The objective of this paper is to investigate the importance of introducing stochastic elements into service network design formulations. To offer insights into this issue, we take a basic version of the problem in which periodic schedules are built for a number of vehicles and where only the demand may vary stochastically. We study how solutions based on uncertain demand differ from solutions based on deterministic demand and provide qualitative descriptions of the structural differences. Some of these structural differences provide a hedge against uncertainty by using consolidation. This way we get consolidation as output from the model rather than as an a priori required property. Service networks with such properties are robust, as seen by the customers, by providing operational flexibility.

Keywords: stochastic programming; service network design; scheduling; flexibility; robustness (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (61)

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Persistent link: https://EconPapers.repec.org/RePEc:inm:ortrsc:v:43:y:2009:i:2:p:144-157

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