Optimal Air-Cargo Allotment Contract with Multiple Freight Forwarders


รศ.ดร.กาญจ์นภา อมรัชกุล


International Conference on Operations Research and Enterprise Systems


Consider the air-cargo service chain which comprises a carrier and multiple forwarders. The carrier and each of the forwarders may establish an allotment contract at the start of the season. We formulate the contract design problem as a Stackelberg game, in which the carrier is the leader and offers a contract to a forwarder. The contract parameters may include the discount contract price and the penalty cost for the unused allotment as well as the minimum allotment utilization. The carrier’s contract is accepted, if the forwarder earns at least its reservation profit. Given the carrier’s offer, the forwarder decides how much to book as an allotment, in order to maximize its own expected profit. We show that the two-parameter contract suffices to coordinate the service chain, and the carrier earns the maximum chain’s expected profit less the total reservation profits of all forwarders. If the penalty cost is not imposed, then the minimum allotment utilization is needed to construct an efficient contract. On the other hand, if the penalty cost is strictly positive, then there is no need to impose the minimum allotment requirement.