Revenue management in road-based freight transportation: Impacts of uncertainty of capacity consumption
International Journal of Physical Distribution & Logistics Management
ISSN: 0960-0035
Article publication date: 11 May 2012
Abstract
Purpose
Freight carriers operating in a spot-market environment are faced with uncertain future capacity demand, actual revenues, and properties of freight items. They require information about the expected future consumption of limited capacity to derive suitable request acceptance decisions. The purpose of this paper is to present a new idea to improve the handling of inaccurate information on the weight and volume of upcoming requests.
Design/methodology/approach
The authors start with the definition of a new mathematical optimization model as the backbone of a capacity control system. This model is embedded within a rolling-horizon decision-making process involving consecutively arriving requests. Computational simulation experiments are carried out to evaluate the applicability and efficiency of the proposed decision support system. The authors investigate how the new model contributes towards keeping the negative impacts of inadequate forecasts of the expected volume of future requests as low as possible.
Findings
In traditional application fields of capacity control (airline ticketing or hotel reservations) the physical extent of a request is always 1 (set/bed/room). In road-based freight transportation the variety of the physical extent of requests is much more complicated and complex. The major finding is that existing capacity control approaches are unable to meet the special requirements of road-haulage. Innovative capacity control features are necessary in order to cope with the higher request portfolio complexity.
Originality/value
This paper addresses the requirements of a capacity control system for road-based freight transportation. An innovative decision support system is evaluated. For the first time, the authors present a comprehensive quantitative simulation study dedicated to this complicated decision-making situation.
Keywords
Acknowledgements
This research was supported by the German Research Foundation (DFG) as part of the Collaborative Research Centre 637 “Autonomous Cooperating Logistic Processes” (Subproject B7).
Citation
Schönberger, J. and Kopfer, H. (2012), "Revenue management in road-based freight transportation: Impacts of uncertainty of capacity consumption", International Journal of Physical Distribution & Logistics Management, Vol. 42 No. 4, pp. 388-403. https://doi.org/10.1108/09600031211231353
Publisher
:Emerald Group Publishing Limited
Copyright © 2012, Emerald Group Publishing Limited