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Cost allocation in collaborative forest transportation

Frisk, Mikael; Göthe-Lundgren, Maud; Jörnsten, Kurt; Rönnqvist, Mikael
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URI
http://hdl.handle.net/11250/163867
Date
2006
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  • Discussion papers (FOR) [556]
Abstract
Transportation planning is an important part of the wood flow chain in forestry. There are often several forest companies operating in the same region and co-ordination between two or more companies is rare. However, there is an increasing interest in collaborative planning as the potential savings are large, often in the range 5-15%. A key question is how savings should be distributed among the participants. In this paper we investigate a number of possibilities based on economic models including Shapley value, the nucleolus, separable and non-separable costs, shadow prices and volume weights. We also propose a new allocation method based on finding as equal relative profits as possible among the participants. A case study including eight forest companies is described and analyzed.
Publisher
Norwegian School of Economics and Business Administration. Department of Finance and Management Science
Series
Discussion paper
2006:15

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