Analysis of third-party warehousing contracts with commitments

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journalNot applicablepeer-review

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Author(s)

Detail(s)

Original languageEnglish
Pages (from-to)603-610
Journal / PublicationEuropean Journal of Operational Research
Volume131
Issue number3
StatePublished - 16 Jun 2001
Externally publishedYes

Abstract

This paper considers multi-period warehousing contracts under random space demand. A typical contract is specified by a starting space commitment plus a certain number of times at which the commitment can be further modified. Three forms of contracts are analysed: (1) there is a restriction on the range of commitment changes and the schedule for the changes is preset by the warehouser; (2) the same as form (1) but there is no restriction on the range; (3) the same as form (2) but the schedule for the changes is chosen by the user. We explore properties and algorithms for the three problems from the user's perspective. Solutions of simple form are obtained for the first two models and an efficient dynamic programming (DP) procedure is proposed for the last. A numerical comparison of the total expected leasing costs suggests that under certain demand patterns, contract forms (2) and (3) could be cost effective. © 2001 Elsevier Science B.V.

Research Area(s)

  • Dynamic programming, Stochastic processes, Third-party logistics, Warehousing contracts

Citation Format(s)

Analysis of third-party warehousing contracts with commitments. / Chen, Frank Y.; Hum, S. H.; Sun, J.

In: European Journal of Operational Research, Vol. 131, No. 3, 16.06.2001, p. 603-610.

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journalNot applicablepeer-review