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Richa Agarwal Defense

Title: Network Design and Alliance Formation for Liner Shipping

Time:	Thursday, May 03, 10:00am
Location:	226A Groseclose Building
Advisor:	Dr. Ozlem Ergun
Committee:	Dr. Ozlem Ergun, Industrial & Systems Engineering
	Dr. Ellis Johnson, Industrial & Systems Engineering
	Dr. George L. Nemhauser, Industrial & Systems Engineering
	Dr. Michael D. Meyer, Civil & Environmental Engineering
	Dr. H. Venkateswaran, College of Computing
Reader:	Dr. R. G. Parker, Industrial & Systems Engineering

Abstract: In the sea cargo industry, liner shipping accounts for over 60% of the value of goods shipped. In this thesis we study some of the problems related to this industry.

Given a set of cargo to be transported, a set of ports and a set of ships, a common problem faced by carriers in liner shipping is the design of their service network. We develop an integrated model to design service network for the ships and to route the available cargo, simultaneously. The proposed model incorporates many relevant constraints, such as the weekly frequency constraint on the operated routes, and emerging trends, such as obtaining benefits from transshipping cargo on two or more service routes, that appear in practice but have not been considered previously in literature. Also, we design exact and heuristic algorithms to solve the integer program efficiently. The proposed algorithms integrate the ship scheduling problem, a tactical planning level decision, and the cargo routing problem, an operational planning level decision, and provide good overall solution strategy. Computational experiments indicate that larger problem instances, as compared to the literature, can be solved using these algorithms in acceptable computational time.

An interesting problem that lies at the intersection of mathematics and operations research is the efficient functioning of a decentralized system composed of various individual decision makers. In this thesis we study alliance formation among liner carriers. While each carrier's individual goal is to maximize his own benefits, collaboration among carriers helps them achieve economies of scale, more extensive and regular service and better utilization of expensive assets such as ships. For the formation of a sustainable alliance, carriers need to agree on an overall service network and resolve issues concerning distribution of benefits and costs among the members of the alliance. We develop mechanisms to guide the members of an alliance to design a collaborative service network and distribute the benefits of the alliance in a fair way. The mechanism utilizes inverse optimization techniques to obtain capacity exchange costs in the network. These costs provide side payments to the members, on top of the revenue generated by them in the collaborative solution, to motivate them to act in the best interest of the alliance while satisfying their own self interests.

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