Cost allocation in the establishment of a collaborative transportation agreement—an application in the furniture industry

Audy J-F (), S D’Amours () and Rousseau L-M
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Audy J-F: Université Laval
S D’Amours: Université Laval
Rousseau L-M: École Polytechnique de Montréal

Journal of the Operational Research Society, 2011, vol. 62, issue 6, 960-970

Abstract: Abstract Transportation is an important part of the Canadian furniture industry supply chain. Even though there are often several manufacturers shipping in the same market region, coordination between two or more manufacturers is rare. Recently, important potential cost savings and delivery time reduction have been identified through transportation collaboration. In this paper we propose and test on a case study involving four furniture companies, a logistics scenario that allows transportation collaboration. Moreover, we address the key issue of cost savings sharing, especially when heterogeneous requirements by each collaborating company impact the cost-savings. To do so, we propose a new cost allocation method that is validated through a case study. Sensibility analysis and details about the actual outcome of the case study complete the discussion.

Keywords: collaboration; cost allocation; furniture industry; game theory; horizontal cooperation; road transport (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (6)

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DOI: 10.1057/jors.2010.53

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