Management Sciences and Quantitative Methods Commons^™

Pricing And Product Mix Optimization In Freight Transportation, Michael F. Gorman

Michael F. Gorman

We propose improved pricing and market mix can improve the profitability of the freight transportation provider through the reduction of equipment repositioning costs. We hypothesize that because of complexities surrounding pricing and equipment repositioning costing, existing pricing strategies in freight transportation fail to fully consider these costs. We test this hypothesis in an applied setting in which Monte Carlo simulation captures the stochasticity of market conditions inherent in the problem. We use a heuristic to improve the nondifferentiable, discontinuous objective function. Our results from test cases show with high confidence that current prices are not optimal, as indicated by a …

Integrating Strategic And Tactical Rolling Stock Models With Cyclical Demand, Michael F. Gorman

Michael F. Gorman

In the transportation industry, companies position rolling stock where it is likely to be needed in the face of a pronounced weekly cyclical demand pattern in orders.

Strategic policies based on assumptions of repetition of cyclical weekly patterns set rolling stock targets; during tactical execution, a myriad dynamic influences cause deviations from strategically set targets. We find that optimal strategic plans do not agree with results of tactical modeling; strategic results are in fact suboptimal in many tactical situations. We discuss managerial implications of this finding and how the two modeling paradigms can be reconciled.