Title: A versatile framework for cooperative hub network development

Authors: Frans Cruijssen, Peter Borm, Wout Dullaert, Herbert Hamers

Addresses: Operations Research and Logistics, Wageningen University, Wageningen, The Netherlands. ' CentER and Department of Econometrics and Operations Research, Tilburg University, Tilburg, The Netherlands. ' Institute of Transport and Maritime Management Antwerp, Antwerp University, Antwerp, Belgium. ' CentER and Department of Econometrics and Operations Research, Tilburg University, Tilburg, The Netherlands

Abstract: This paper introduces a framework for cooperative hub network development. Building a joint physical hub for the transshipment of goods is expensive and, therefore, involves considerable risks for cooperating companies. In a practical setting, it is unlikely that an entire network will be built at once. Rather, the partners will have a more cautious attitude and build hub facilities one by one. In the proposed framework, each time a new hub is introduced, the partners will have the opportunity to decide whether or not they will participate (and thus, invest) in this network extension. In addition, joint cost savings will be allocated to the partners using the Shapley value, a well-known solution concept from cooperative game theory. This framework can accommodate any type of optimisation procedure for network design. [Received 21 September 2008; Revised 09 February 2009; Revised 29 April 2009; Accepted 04 May 2009]

Keywords: hub networks; horizontal cooperation; cooperative game theory; optimisation; network design; goods transshipment; logistics; distribution.

DOI: 10.1504/EJIE.2010.031078

European Journal of Industrial Engineering, 2010 Vol.4 No.2, pp.210 - 227

Published online: 20 Jan 2010 *

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