Publication Type

Conference Proceeding Article

Version

submittedVersion

Publication Date

9-2015

Abstract

A number of cities around the world have adopted urban consolidation centers (UCCs) to address challenges of last-mile deliveries. At the UCC, goods are consolidated based on their destinations prior to their deliveries into city centers. Typically, a UCC owns a fleet of ecofriendly vehicles to carry out such deliveries. Shippers/carriers that make use of the UCC’s service hence no longer need to be restricted by timewindow and vehicle-type regulations. As a result, they retain the ability to deploy large trucks for the economies of scale from the source to the UCC which is located outside the city center. Furthermore, the resources which would otherwise be spent in the city center can then be utilized for other purposes. With possibly tighter regulation and thinning profit margin in near future, requests for UCC’s services will become more and more common, and there is a need for a market mechanism to allocate UCC’s resources to provide sustainable services for shippers/carriers in a win-win fashion. An early work of our research team (Handoko et al., 2014) proposed a profit-maximizing auction mechanism for the use of UCC’s last-mile delivery service. In this paper, we extend this work with an idea of rolling horizon to give bidders more flexibility in competing for the UCC’s resources in advance. In particular, it addresses the needs of many shippers/carriers to be able both plan deliveries weeks ahead and at the same time bid for the UCC’s service at the last minute. Under our rolling horizon framework, the capacity of the same truck is up for bid in several successive auctions. To allocate truck capacities among these auctions under future demand uncertainty, we propose a virtual pricing mechanism which makes use of Target-oriented Robust Optimization techniques.

Keywords

Rolling horizon, Virtual pricing, Urban consolidation center

Discipline

Operations and Supply Chain Management | Operations Research, Systems Engineering and Industrial Engineering | Transportation

Research Areas

Operations Management

Publication

Computational Logistics: 6th International Conference, ICCL 2015 Delft, The Netherlands, September 23-25, 2015: Proceedings

Volume

9335

First Page

422

Last Page

436

ISBN

9783319242637

Identifier

10.1007/978-3-319-24264-4_29

Publisher

Springer Verlag

City or Country

Berlin

Additional URL

https://doi.org/10.1007/978-3-319-24264-4_29

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