Pricing in dynamic vehicle routing problems

The principal focus of this paper is to study carrier pricing decisions for a new type of vehicle routing problems defined in a competitive and dynamic environment. This paper introduces the Vehicle Routing Problem in a Competitive Environment (VRPCE), as an extension of the Traveling Salesman Problem with Profits (TSPP) to a dynamic competitive auction environment. In the VRPCE, the carrier must estimate the incremental cost of servicing new service requests as they arrive dynamically. The paper presents a rigorous and precise treatment of the sequential pricing and costing problem that a carrier faces in such an environment. The sequential pricing problem presented here is an intrinsic feature of a sequential auction problem. In addition to introducing the formulation of this class of problems and discussing the main sources of difficulty in devising a solution, a simple example is constructed to show that carriers' prices under first price auction payment rules do not necessarily reflect the cost of servicing transportation requests. An approximate solution approach with a finite look-ahead horizon is presented and illustrated through numerical experiments, in competition with a static approach with no look-ahead.(a)

  • Availability:
  • Authors:
    • JAILLET, P
  • Publication Date: 2006-4


  • English

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  • Accession Number: 01043183
  • Record Type: Publication
  • Source Agency: ARRB
  • Files: ITRD, ATRI
  • Created Date: Mar 6 2007 8:26AM