Two-stage stochastic modeling of transportation outsourcing plans for transshipment centers

Abstract

In this study, we deal with the problem of short-term transportation outsourcing for transshipment centers. The carrier needs to determine the numbers of outsourced and self-run trips for the different types of transportation tasks. Stochastic demands which are likely to occur in actual operation are considered. Different trip numbers need to be determined in sequence, so a two-stage stochastic programming technique is applied to formulate the problem. Two models are developed based upon practical considerations to help determine the optimal transportation outsourcing plan. A case study regarding the operations of a logistics carrier in Taiwan is performed. Several tests are also performed considering the number of demand scenarios, optimality gaps, variations in demands, outsourcing cost variations, and problem dimensions in order to better understand the performance of the two models.