Purpose
The purpose of this paper is to study a transportation service procurement bid construction problem from a less than a full truckload perspective. It seeks to establish stochastic mixed integer programming to allow for the proper bundle of loads to be chosen based on price, which could improve the likelihood that carrier can earn its maximum utility.
Design/methodology/approach
The authors proposes a bi-level programming that integrates the bid selection and winner determination and a discrete particle swarm optimization (PSO) solution algorithm is then developed, and a numerical simulation is used to make model and algorithm analysis.
Findings
The algorithm comparison shows that although GA could find a little more Pareto solutions than PSO, it takes a longer time and the quality of these solutions is not dominant. The model analysis shows that compared with traditional approach, our model could promote the likelihood of winning bids and the decision effectiveness of the whole system because it considers the reaction of the shipper.
Originality/value
The highlights of this paper are considering the likelihood of winning the business and describing the conflicting and cooperative relationship between the carrier and the shipper by using a stochastic mixed integer programming, which has been rarely examined in previous research.
