Newsvendor Model in Rail Contract to Transport Gasoline in Thailand

Kannapha Amaruchkul

Abstract

A long-term contract between a railroad company and a shipper who wants to transport gasoline daily is studied. The contract specifies an upfront payment for reserving bogies and a per-container freight rate. The shipper also uses a trucking company to transport the excess demand, but its per-liter transportation cost is higher. The shipper’s problem is to determine the number of bogies to reserve at the beginning of the contract duration, before daily demand is revealed. Since demand is perishable, we formulate the problem as a newsvendor model. The expected cost function is not convex. We show that the expected cost is unimodal and derive an optimal solution under certain conditions, which are not very restrictive. We also provide a sensitivity analysis with respect to the change in the contract parameter.

References

  1. Qin, Y., Wang, R., Vakharia, A., Chen, Y., and Seref, M. (2011). The newsvendor problem: Review and directions for future research. European Journal of Operational Research, 213(2):361-374.
  2. Silver, E., Pyke, D., and Peterson, R. (1998). Inventory Management and Production Planning and Scheduling. John Wiley & Sons, Inc., New York.
  3. Yin, M. and Kim, K. (2012). Quantity discount pricing for container transportation services by shipping lines. Computers & Industrial Engineering, 63(1):313-322.
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Paper Citation


in Harvard Style

Amaruchkul K. (2015). Newsvendor Model in Rail Contract to Transport Gasoline in Thailand . In Proceedings of the International Conference on Operations Research and Enterprise Systems - Volume 1: ICORES, ISBN 978-989-758-075-8, pages 237-246. DOI: 10.5220/0005198102370246


in Bibtex Style

@conference{icores15,
author={Kannapha Amaruchkul},
title={Newsvendor Model in Rail Contract to Transport Gasoline in Thailand},
booktitle={Proceedings of the International Conference on Operations Research and Enterprise Systems - Volume 1: ICORES,},
year={2015},
pages={237-246},
publisher={SciTePress},
organization={INSTICC},
doi={10.5220/0005198102370246},
isbn={978-989-758-075-8},
}


in EndNote Style

TY - CONF
JO - Proceedings of the International Conference on Operations Research and Enterprise Systems - Volume 1: ICORES,
TI - Newsvendor Model in Rail Contract to Transport Gasoline in Thailand
SN - 978-989-758-075-8
AU - Amaruchkul K.
PY - 2015
SP - 237
EP - 246
DO - 10.5220/0005198102370246