Analysis of different cost allocation methods in a collaborative transport setting
Faculty of Applied Economics
International journal of engineering management and economics
, p. 132-150
University of Antwerp
In collaborative transport, dividing the total cost of the coalition between its different partners is a key issue. However, as each coalition has its own set of preferences and has partners with different characteristics, a cost allocation method suitable in all situations does not exist. In this paper, a set of cost allocation methods, some academic and some used in practice, are evaluated in different situations. We investigate how well these methods behave when partners have different characteristics, e.g., when one partner ships a much larger volume than the others, it is very likely that this partner does not agree to allocate costs according to the volume of each partner. We provide an overview of which cost allocation methods suffice in which situations, showing that a right cost allocation is highly dependent on the characteristics of the coalition. Keywords: cost allocation; logistics collaboration; bundling; game theory.