How flow can you go?: a logistic management game and profit sharing

Abstract

The management game "How flow can you go?" is developed to convince decision makers of international logistic providers that their current planning methods of their transportation flows may be considerably improved using OR-techniques. In fact, we have tested the game with several planners of several logistic providers and it turns out that the mathematical tool included in the management game outperforms the planners' solutions, on average, by 10%. Next, we show that cooperation among different logistic providers or between individual business units of one provider may increase profit even more. Since a fair allocation of these extra profits is essential for a successful cooperation, we use cooperative game theory methodology. More precisely, we propose the Shapley value of a cooperative game that arises from the management game as a fair allocation. Finally, the management game is illustrated by means of a case of an international logistic provider.