Dynamic Network Design for Fourth Party Logistics Considering Multi-period Pricing under Stochastic Demand

With the increasingly competitive market in the logistics industry, it may be crucial to increase market share by adjusting freight prices. The problem of dynamic network design considering multi-period pricing has become a new challenging problem in fourth party logistics (4PL) operation mode. This paper uses demand scenarios to describe stochastic demand. Through the relationship between price and demand, a method to obtain the freight price levels is introduced. The mixed integer programming model is established to maximize network profit under limited investment. The performance and application of the model are investigated through two reasonable scale examples. The numerical results show that the solutions obtained by using CPLEX solver to solve the small-scale example of the mixed integer programming model are acceptable. Moreover, numerical experiments analysis the influence of maximum investment cost and multi-period pricing. The results demonstrate the significance of the proposed model and multi-period pricing.