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Dynamic pricing model for less-than-truckload carriers in the Physical Internet

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Abstract

This paper investigates a less-than-truckload dynamic pricing decision-making problem in the context of the Physical Internet (PI). The PI can be seen as the interconnection of logistics networks via open PI-hubs. In terms of transport, PI-hubs can be considered as spot freight markets where LTL requests with different volumes/destinations continuously arrive over time and only remain for short periods. Carriers can bid for these requests using short-term contracts. In a dynamic, stochastic environment like this, a major concern for carriers is how to propose prices for requests to maximise their revenue. The latter is determined by the proposed price and the probability of winning the request at that price. This paper proposes a dynamic pricing model based on an auction mechanism to optimise the carrier’s bid price. An experimental study is conducted in which two pricing strategies are proposed and assessed: a unique bidding price (one unique price for all requests at an auction), and a variable bidding price (price for each request at an auction). Three influencing factors are also investigated: quantity of requests, carrier capacity, and cost. The experimental results provide insightful conclusions and useful guidelines for carriers regarding pricing decisions in PI-hubs.

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Authors and Affiliations

  1. MINES ParisTech, PSL Research University, CGS - Centre de Gestion Scientifique, i3 UMR CNRS 9217, 60 Bd St Michel, 75006, Paris, France

    Bin Qiao, Shenle Pan & Eric Ballot

Authors
  1. Bin Qiao
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  2. Shenle Pan
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  3. Eric Ballot
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Corresponding author

Correspondence to Shenle Pan.

Appendix

Appendix

See Table 4.

Table 4 Set of optimal prices tested in Scenario 2 (Line = the remaining capacity, Column = the number of remaining requests)
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Qiao, B., Pan, S. & Ballot, E. Dynamic pricing model for less-than-truckload carriers in the Physical Internet. J Intell Manuf 30, 2631–2643 (2019). https://doi.org/10.1007/s10845-016-1289-8

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  • DOI: https://doi.org/10.1007/s10845-016-1289-8

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