Two-stage dynamic pricing mechanism to improve the flexibility of multi-stage logistics services and the profitability of logistics service providers

Abstract

Logistics (transport) flexibility has been widely discussed. However, mature logistics service providers (LSPs) will not make frequent decisions to change the transportation path or build new logistics centers. This thesis proposes a set of feasible operation mode and pricing mechanism to transform current logistics service into mass customization service. By adding flexibility to the services, LSP can provide customized services for each client, thereby increasing profitability while maintaining (even promoting) client satisfaction. It is worth mentioning that, unlike the previous research that is mainly based on network theory (link/line perspective) to optimize logistics flexibility. This thesis weakens the role of links between logistics depots, and develops optimization strategies based on “depot/point perspective”. This thesis mainly applies the mathematical modeling method, and concludes what decisions the client and the LSP will make when applying the new mechanism. The mechanism of this thesis can be widely applied to various cargo and passenger transportation scenarios with multi-stage transportation.