Cooperative Game-Theoretic Features of Cost Sharing in Location-Routing

25 Pages Posted: 25 Oct 2018

See all articles by Ondrej Osicka

Ondrej Osicka

Norwegian School of Economics (NHH) - Department of Business and Management Science

Mario Guajardo

Norwegian School of Economics (NHH) - Department of Business and Management Science

Thibault van Oost

Norwegian School of Economics (NHH) - Department of Business and Management Science

Date Written: September 24, 2018

Abstract

This article studies several variants of the location-routing problem using a cooperative game-theoretic framework. The authors derive characteristics in terms of subadditivity, convexity, and non-emptiness of the core. Moreover, for some of the game variants, it is shown that for facility opening costs substantially larger than the costs associated with routing, the core is always non-empty. The theoretical results are supported by numerical experiments aimed at illustrating the properties and deriving insights. Among others, it is observed that, while in general it is not possible to guarantee core allocations, in a huge majority of cases the core is non-empty.

Keywords: Collaborative logistics, Location-routing, Cooperative game theory, Cost allocation

JEL Classification: C00, C71

Suggested Citation

Osička, Ondřej and Guajardo, Mario and van Oost, Thibault, Cooperative Game-Theoretic Features of Cost Sharing in Location-Routing (September 24, 2018). NHH Dept. of Business and Management Science Discussion Paper No. 2018/11. Available at SSRN: https://ssrn.com/abstract=3272182 or http://dx.doi.org/10.2139/ssrn.3272182

Ondřej Osička (Contact Author)

Norwegian School of Economics (NHH) - Department of Business and Management Science ( email )

Helleveien 30
Bergen, NO-5045
Norway

Mario Guajardo

Norwegian School of Economics (NHH) - Department of Business and Management Science ( email )

Helleveien 30
Bergen, NO-5045
Norway

Thibault Van Oost

Norwegian School of Economics (NHH) - Department of Business and Management Science ( email )

Helleveien 30
Bergen, NO-5045
Norway

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