Aggregate–disaggregate approach to an airfreight forwarder’s planning under uncertainty: a case study

Abstract

Resource planning of airfreight forwarders is a complex endeavor, requiring decisions to be made in a dynamic and uncertain environment. Airfreight forwarders acquire airfreight spaces from three sources: allotment from carriers, retail from carriers and subcontracting to partners, all of which differ in terms of cost, flexibility and timing of booking. This real-life problem has many planning decisions (bookings in terms of carriers, route, time, ULDs, etc.). In this case study, we propose an aggregate–disaggregate approach and focus on the most critical decisions. A two-stage stochastic dynamic program first determines, in aggregates, the amount of allotment bookings, retail resources, and subcontracting or surplus co-loading. Then, a heuristic is used to disaggregate resource requirements into specific bookings. An analysis is provided to examine the relevant managerial issues. Based on real-life data, we show several patterns of aggregate resource bookings with respect to different levels of demand uncertainty and cost parameters. We show that resource disaggregation has to balance cost-effectiveness, capacity flexibility and routing flexibility of a resource plan.

Keywords:

• logistics
• airfreight forwarder
• resource planning
• demand uncertainty
• two-stage stochastic dynamic program

Electronic supplementary material

The online version of this article (doi:10.1057/s41274-016-0124-0) contains supplementary material, which is available to authorized users.

Electronic supplementary material

The online version of this article (doi:10.1057/s41274-016-0124-0) contains supplementary material, which is available to authorized users.

Acknowledgements

This research was supported in part by the RGC [grant 491813] from the Hong Kong Government and by the National Natural Science Foundation of China [grant 71271222].