International Transactions in Operational Research

Cooperative game‐theoretic features of cost sharing in location‐routing

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Abstract While the interest in both collaborative logistics and location‐routing has grown considerably, horizontal cooperation in location‐routing problems remains fairly unattended. This article studies several variants of the location‐routing problem using a cooperative game‐theoretic framework. The authors derive characteristics in terms of subadditivity, convexity, and non‐emptiness of the core. Moreover, for some of the game variants, it is shown that for facility opening costs substantially larger than the costs associated with routing, the core is always nonempty. The theoretical results are supported by numerical experiments aimed at illustrating the properties and deriving insights. Among others, it is observed that, while in general it is not possible to guarantee core allocations, in a huge majority of cases the core is nonempty.

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