Decision-Making in Optimizing the Contract of Third Party Logistic

Growing service science concerns have motivated businesses to carefully apply outsourcing logistics achieving core competition. Third party logistics plays an important role in achieving outsourcing logistics by providing customers with the opportunity to outsource logistics to the third party logistics providers. An efficient third party logistics contract may lead to a significant return on outsourcing as well as a significantly increased competitiveness in the market. In order to ensure efficiency, the selection of parameters in the third-party outsourcing contract is a crucial step in initializing logistics related practices. This study aims to efficiently assist the decision makers in determining the optimization parameters of third-party contract using an economic model based on gaming theory. A numerical example is also included in the study to demonstrate the steps of the proposed model. In the end, the procedure of decision-making in optimizing the contract is concluded.