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Department of Business and Management Science, NHH Norwegian School of Economics, N-5045 Bergen, Norway
Dpartement de gnie mcanique, Universit Laval, Qubec, G1V 0A6, Canada
a r t i c l e
i n f o
Article history:
Received 10 August 2013
Accepted 16 June 2014
Available online 2 July 2014
Keywords:
Game theory
Group decisions and negotiations
Collaborative logistics
Forest transportation
Inventory sharing
a b s t r a c t
Given a set of players and the cost of each possible coalition, the question we address is which coalitions
should be formed. We formulate mixed integer linear programming models for this problem, considering
core stability and strong equilibrium. The objective function looks for minimizing the total cost allocated
among the players. Concerned about the difculties of managing large coalitions in practice, we also
study the effect of a maximum cardinality constraint per coalition. We test the models in two applications. One is in collaborative forest transportation and the other one in inventory of spare parts for oil
operations. In these situations, collaboration opportunities involving signicant savings exist, but for several reasons, it may be better to group the players in different sub-coalitions rather than in the grand coalition. The models we propose are thus relevant for deciding how to partition the set of players. We also
prove that if the strong equilibrium model is feasible, its optimal cost is equal to the optimal cost of the
core stability model and, consequently, a coalition structure that solves one problem also solves the other
problem. We present results that illustrate this property. We also present results where the core stability
problem is feasible and the strong equilibrium problem is infeasible. Setting an upper bound on the maximum cardinality of the coalitions, allows us to study the marginal savings of enlarging the cardinality of
the coalitions. We nd that the marginal savings of allowing one more player signicantly decreases as
the bound increases.
2014 Elsevier B.V. All rights reserved.
1. Introduction
Collaboration among different agents is an effective way to
improve logistic operations. Evidence has been provided in many
industries. For instance, Nagarajan and Sosic (2009) and
Nagarajan and Bassok (2008) refer to a variety of contexts where
different suppliers create coalitions to achieve the benets of collaboration, including complementary component-suppliers for
car assembly systems, the health-care industry and various service
sectors. Other examples arise in inventory management (Chen,
2009; zen, Fransoo, Norde, & Slikker, 2008) and transport (Frisk,
Gthe-Lundgren, Jrnsten, & Rnnqvist, 2010; Lozano, Moreno,
Adenso-Daz, & Algaba, 2013). In order to implement collaboration,
there needs to be an agreement among the agents with respect to
how to share the benets. A growing body of literature in Operations Research and Management Science has applied principles of
cooperative game theory to resolve this sharing issue. One of the
main streams in this literature aims at dening allocation rules
Corresponding author. Tel.: +47 55959834; fax: +47 55959650.
E-mail addresses: mario.guajardo@nhh.no (M. Guajardo), mikael.ronnqvist
@gmc.ulaval.ca (M. Rnnqvist).
http://dx.doi.org/10.1016/j.ejor.2014.06.015
0377-2217/ 2014 Elsevier B.V. All rights reserved.
148
X
uj 6 C Z
8Z N
j2Z
X
uj C N
j2N
3. MIP models
In the following, we formulate mixed integer programming
models for the core stability and the strong stability versions of
the coalition structure problem. First, let us introduce the notation
on sets, parameters and decision variables.
Sets
N: set of players.
K: set of coalitions.
Parameters
C k : Total cost of coalition k.
aj;k
bk;k
8
>
<1
>
:
Variables
xk
149
1 if coalition k is formed
0
min
XX
uj;k
j2N k2K
Constraints
k 2 K : b 1
aj;k uj;k 6 C k xk 8k;
k;k
j2N
aj;k uj;k C k xk 8k 2 K
j2N
aj;k xk 1 8j 2 N
k2K
150
allocated cost, the optimal value of variable uj;k is zero for all j; k
such that coalition k is not formed and also for all j; k such that
player j does not belong to coalition k.
Model M1 is a mixed integer programming model that solves a
set partitioning problem, subject to the stability constraints. A
solution to this model exists (in the worst case where collaboration
does not achieve any savings, the structure of all players standing
alone is stable). If we knew beforehand that the core of each coalition (or at least the core of each of those coalitions that minimize
cost) is not empty, an equivalent approach to solve the problem
could be given by the following two-stages procedures. In the rst
stage, a pure set partitioning problem is solved, for instance,
through an integer programming model in the binary variables
P
xk , dened by the objective function min k2K C k xk subject to constraints (6). In the second stage, a stable allocation must be determined for each coalition k such that in the optimal solution to the
set partitioning model xk 1. However, the information on the
non-emptiness of the core in our setting is not known beforehand,
since we do not make any related assumption on the cost parameter values C Z . That is why it is important to consider the coalition
structure and the cost allocation problems simultaneously in the
same model. Then, if a solution (; u) to this model is found, it
assures the cost allocation vector u satises the stability conditions
within each coalition in the structure . Then, the implementation
of the structure could re-allocate the cost within each formed coalition through any other desirable allocation rule.
3.2. The structure of strongly stable coalitions at minimum cost
The coalition structure resulting from model M1 assures that
players from the same coalition that is formed have no incentives
to deviate and create their own coalition. However, the structure
does not assure that players who belong to different coalitions
have no incentive to conform a new coalition. This needs incorporating the notion of strong equilibrium, in order to assure not only
stability within the formed coalitions, but also in the whole structure, so that for players who were assigned to different coalitions
there would be no incentives to form a different coalition. We formulate a mixed integer linear programming model for this problem in a similar way to model M1, maintaining objective
function (3) and constraints (5)(7), but replacing constraints (4)
by the following constraints:
X
j2N
aj;k
X
uj;k
!
6 C k 8k 2 K:
k2K
represents the maximum number of players allowed in each coalition. The size of a coalition has been identied by DAmours and
Rnnqvist (2010) as an important aspect in collaborative logistics.
In practice, the upper bound on the coalitions size might be motivated for several reasons. For example, Lozano et al. (2013) point
out that although transportation costs are always reduced through
collaboration, as the number of partners grows coordinating the
cooperation becomes more problematic and/or costly, which is
one of the reasons why in practice cooperation in transport usually
involves just a few partners. Other reasons are argued by Stein
(2010), who remarks that the formation of coalitions might be
restricted due to structural issues, laws and culture ideology. He
refers to some other references in restrictive cooperative game theory (so called network games), and remarks that although some
of them date from early times, the literature in this eld is still
sparse and fragmentary. As another reason, in one of the cases that
primarily motivated our work, we have observed that managers
are subject to some political issues which do not allow the implementation of a grand coalition, but only of smaller sub-coalitions.
For example, in our inventory management case, it might be clear
that because of the risk pooling effect, a completely centralized
solution performs better in terms of costs than the decentralized
solution where there is no collaboration. However, in order to
change a previously implemented decentralized solution, the managers decision needs to consider that a centralized solution would
perhaps need signicantly less staff. In some organizations this
might involve some difcult issues.
In general, all these reasons affecting the maximum cardinality
of a coalition may not be easy to reect in the cost functions.
Therefore, it becomes relevant to analyze the coalition structure
problem subject to a maximum cardinality constraint. An obvious
alternative to incorporating this condition in models M1 an M2 is
to simply re-dene the set K including only coalitions of cardinality
less than or equal to m (or just to set xk 0 8k : Sk > m, where Sk is
a parameter indicating the cardinality of coalition k). For an upper
bound m, we will refer by fm and f m to the optimal objective value
of models M1 and M2, respectively.
Note that the coalition structure problem subject to the maximum cardinality constraint presents similarities with k-partitioning problems, which arise in multiprocessor scheduling of jobs
on machines at minimum makespan (Babel, Kellerer, & Kotov,
1998, Kellerer and Kotov, 2011). These problems also look for a
partition into subsets subject to a cardinality limit. However, while
in k-partitioning problems the weight (processing time or cost)
depends only on the item and not in the subset (machine) it is
assigned to, in the coalition structure problem the cost is associated to the subset rather than the sum of the costs of its members.
Also, the coalition structure problem includes the stability constraints and the allocation variables which do not appear in k-partitioning problems.
3.4. Relation between the solutions of models M1 and M2
In the following, we present a proposition that relates the solutions of models M1 and M2.
Proposition 1. If the strongly stable coalition structure model (M2) is
feasible, then its optimal objective value is equal to the optimal
objective value of the core-stable coalition structure model (M1).
Likewise, if model M2 is feasible, a coalition structure that solves any
of the two models, also solves the other model.
This relationship between the solutions to the two models is
fairly intuitive because the strong stability condition is more
restrictive than the core stability condition. In fact, since constraint
for
(8) must hold for all k 2 K, in particular it must hold for any k
151
min C k
s:t:
cp wp
p2P k
aijp wp 6 sij ; 8i 2 Ij ; j 2 J k
10
dljp wp dlj ; 8l 2 Lj ; j 2 J k
11
p2Pk
p2Pk
wp P 0; 8p 2 Pk
12
The variable wp denotes the ow in backhaul route p and cp the corresponding unit cost. The set of routes for each coalition is given by
the set Pk . The coefcients aijp have value 1 if route p picks up at
supply point i at company j and 0 otherwise. In the same way dljp
has value 1 if route p delivers at demand point l at company j and
0 otherwise. The set J k denotes the set of companies in coalition k,
and Ij and Lj the set of supply and demand points, respectively, at
company j. Constraint sets (10) and (11) represent the supply and
demand respectively at each company j in coalition k, and (12)
the non-negativity conditions. We note that direct ow variables
are represented using columns including only 2 nonzero elements
(i.e. one pick up and one delivery). There is often a huge number
of potential backhaul routes (often several hundred millions) and
they can typically not be used explicitly in a solver. Instead, they
are generated in a column generation approach (Carlsson &
Rnnqvist, 2007). The restrictions imposed on the backhaul routes
are e.g. driving time or the number of pick ups and deliveries. In tactical planning, there is often a practical limit for using backhaul
routes consisting of two direct ows.
After having computed the costs C k for all coalition k 2 K, we
use them as parameters in the MIP models of Section 3. We implement these models in AMPL and solve them using the software
CPLEX 12.5 on an Intel Core 2 Duo 2.26 gigahertz processor with
8 gigabyte of RAM. The solutions to models M1 and M2 in these
instances are quickly obtained, in a matter of a second. Note, since
152
there are eight companies, there are 255 coalitions, and consequently 255 binary variables xk . In addition, there are 2040 continuous variables uj;k and 6050 rationality constraints.
The results of solving the models for different values of the
maximum cardinality bound m are shown in Table 1.
From these results we can observe that the optimal value fm of
model M1 is strictly decreasing in m. This means that the structure
of stable coalitions that minimizes total cost always include at
least one coalition of the maximum cardinality allowed by the
upper bound m. This suggests that the more companies are
allowed to collaborate, the less total cost, as expected in this case.
However, the relative cost savings of including an additional company decreases in most cases when increasing the upper bound
from m to m 1 (except when m 6). These relative cost saving
values, calculated as jfm1
fm j=fm 100%, are shown in the
fourth column of Table 1 and plotted in Fig. 1. Note from m 7
to m 8 the relative savings amount to only 0.08%.
The effect of increasing the maximum cardinality allowed for a
coalition is very important in the lowest interval and decreases
with higher m. Fig. 2 shows the cumulative savings with respect
to the base case m 1, i.e., jfm f1 j=jf8 f1 j 100%. It can be
observed that the cumulative savings of allowing coalitions of cardinality up to m 3 already account for more than a half of the
total savings achieved by the grand coalition. And when setting
m 6, more than 90% of these savings are achieved.
This analysis provides insights about the marginal savings of
allowing one more player into the coalitions. These marginal savings becomes considerably less signicant when m approaches
the total number of players. In consequence, the decision maker
in practice should analyze whether these savings overwhelm or
not the managerial complexities of forming larger coalitions.
In order to illustrate how the structures change from one to
another value of m, we have included Fig. 3. This gure shows
the coalition structures resulting for m 2 f2; . . . ; 7g (for m 1 the
Table 1
Optimal objective values, relative savings and cumulative savings of the application in
collaborative forest transportation.
m
1
2
3
4
5
6
7
8
fm
f
m
42.96
41.24
40.58
40.12
39.70
39.52
39.28
39.25
42.96
41.24
40.58
40.12
39.70
Infeasible
39.28
39.25
fm j
jfm1
fm
4.00
1.60
1.13
1.05
0.45
0.61
0.08
jfm f1 j
%
jf8 f1 j
46
64
77
88
93
99
100
optimal coalition structure obviously consists of all players standing alone, while for m 8 it consists of the grand coalition). The
driver to create a coalition depends on the participating companies, geographical distribution and their assortment distribution.
If the companies have more geographical overlap, it creates better
potential savings. In the case study, there are close to 40 assortments based on specie, diameter, length and quality. Any delivery
between companies must be balanced for each assortment.
Changing from m 2 to m 3 makes player P3 to join P2 and
P5, and player P4 to join P1 and P6. This leaves players P7 and
P8 alone. In this instance, these two player have no savings when
acting in coalition (moreover, they would incur more costs by
implementing the coalition because in this instance
C fP7;P8g > C fP7g C fP8g ). Changing from m 3 to m 4 involves
three deviations. For m P 4, the collaboration relations vary less,
with only one deviation when increasing the upper bound by
one. It can also be observed that only players P2 and P5 remain
together in the same coalition for all m 2 f2; . . . ; 7g. These observations illustrate that the upper bound on the cardinality may have
important implications.
Another observation from the results in Table 1 is that model
M1 always had a solution, which is not surprising because a coalition structure satisfying the core stability within each coalition
formed always exists. Also, for all m 6, model M2 was feasible
and, consistently with Proposition 1, the optimal objective value
was the same as the optimal objective value of model M1. Interestingly, when m 6 there exists no strongly stable coalition structure, thus if the upper bound would be xed to a maximum of
six companies per coalition, there will always be incentives for
some of them to deviate from their coalition to join with other
players. For example, the solution we obtained by running model
M1 to this instance results in the structure fZ 1 ; Z 2 g, where
Z 1 fP1; P2; P3; P5; P6; P7g and Z 2 fP4; P8g. This structure
reaches the optimal objective value f 39:52. In the obtained
allocation,
we verify that u3 u4 4:69 2:07 6:76 >
C fP3;P4g 6:73. That is, players P3 and P4 would have incentives
to form their own coalition. However, should we add a constraint
for this example requiring that players P3 and P4 must belong to
the same coalition, the resulting structure reaches a sub-optimal
objective value equal to 39.53 cost units and players P1 and P4
would have incentives to form their own coalitions. These types
of features are not easy to identify beforehand, especially since
the characteristic function is a sort of black box with no particular
properties. Therefore, the modeling approach we present can serve
as a useful support tool for the decision maker.
4.1.1. Individual cost minimization
When the strong equilibrium does not exist, it is worthy to
explore the possibilities for some of the players to conform
Fig. 1. Relative cost savings from allowing one more player in the maximum allowed cardinality of a coalition.
153
Fig. 2. Cumulative cost savings from allowing one more player in the maximum allowed cardinality of a coalition.
Fig. 3. Optimal coalition structures for different upper bounds m in the forestry
case.
min
X
u1;k
13
k2K
uj;k 6 M xk 8j 2 N; k 2 K; M 0
X
X
ai;k
ui;k 6 C k wj M 1 wj
k2K
i2N
8k 2 K; j 2 N; j 1; aj;k 1; M 0
aj;k xk a1;k xk 6 1 wj 8k 2 K; j 2 N; j 1
wj 6
14
aj;k a1;k xk 8j 2 N; j 1
15
16
17
k2K
Constraints (14) assure that uj;k is greater or equal than zero only if
coalition k forms (M is a sufciently large number, e.g. M C k ).
Constraints (15) provide strong stability for the players who join
the coalition of player 1. Constraints (16) and (17) are logical relationships assuring that wj takes value 1 if and only if player j joins
the coalition conformed by player 1. Note that the strong stability
condition in this model is not formulated for player 1, but only
for those players he collaborates with. Table 2 shows the allocations
Table 2
Optimal allocations obtained for the individual cost minimization problems.
O.F.
Min
Min
Min
Min
Min
Min
Min
Min
u1
u2
u3
u4
u5
u6
u7
u8
u1
u2
u3
u4
u5
u6
u7
u8
TOTAL
3.76
3.78
3.78
3.67
3.78
3.78
3.52
3.52
12.86
14.86
14.86
14.07
14.86
14.86
14.7
14.7
4.13
4.74
4.74
3.9
4.74
4.74
3.76
3.76
2.05
2.07
2.07
2.05
2.07
2.07
1.81
1.81
10.11
10.34
10.34
9.54
10.34
10.34
9.44
9.44
4.54
4.96
4.96
4.39
4.96
4.96
4.27
4.27
1.74
1.88
1.88
1.57
1.88
1.88
1.88
1.88
0.33
0.33
0.33
0.33
0.33
0.33
0.33
0.33
39.52
42.96
42.96
39.52
42.96
42.96
39.71
39.71
154
yk;k P
Ck
j2N aj;k C j
P
yk;k 6 xk
8k; k 2 K
yk;k 6 xk
8k; k 2 K
xk xk 6 1 yk;k
C k
j2N
aj;k C j
2K
6 u 8k; k
18
19
20
8k; k 2 K
21
solutions. When u 10% the solutions coincide, because the minimum cost solution satises the upper bound constraint on the
relative savings difference.
4.1.3. The largest cardinality of a stable coalition
Looking for the maximum number of players in a game for
which the core exists is mentioned by Frisk et al. (2010) as an alternative to the EPMs objective function. How this subgroup of players should be selected was, however, left for further research in
their article. We can easily answer this question by using model
M1 with the following two modications. First, the following
objective function is used:
max ^f
S k xk ;
22
k2K
xk 1
23
k2K
Constraint (23) states that only one coalition will be formed, while
objective function (22) maximizes the number of players in it.
When running the resulting model for this instance, we obtain
^f jNj 8. This is not surprising, since it was known from Frisk
et al. (2010) that the core of the game considering the grand coalition in this instance was not empty.
4.1.4. Cost per cardinality
Adding a cost on the coalition cardinality might be useful for
reecting the issues of managing large coalitions. How this cost
should be calculated is, however, a tough task. As we discussed
earlier, these issues are not easy to translate into a cost function.
In order to illustrate the effects that this type of cost could have,
we introduce an additional cost f on each coalition. We assume
that f can be modeled as a convex increasing function of the cardinality of the coalition. This cost does not affect the structure of the
models, but just modies the cost parameter values C in constraints (4), (5) and (8). Namely, the new cost parameter value
b Z C Z fZ.
for coalition Z is C
In our numerical runs, we utilize the function fZ a jZjjZj1
,
jZj1
where jZj is the cardinality of coalition Z and a is a positive parameter. Table 4 shows the results obtained using ve different values
of a.
Since the cost on the cardinality of the coalitions f increase with
a, the relative savings of allowing m 1 players with respect to m
players decrease with a. When f is relatively small, savings are still
realized for the largest values of m; for example, when a 0:1, setting m 7 leads to savings of 0.40% with respect to the case where
m 6. When f is relatively high, the large coalitions do not form,
thus increasing the upper bound on the number of payers per coalition has no impact. For example, when a 0:5 any bound m P 4
Table 3
Optimal objective values of the instances considering a bound u on the maximum difference between relative savings among coalitions.
m
1
2
3
4
5
6
7
8
u 0:1%
u 2:5%
u 5%
u 7:5%
u 10%
fm
f
m
fm
f
m
fm
f
m
fm
f
m
fm
f
m
42.96
42.95
42.95
40.87
40.84
40.84
40.84
39.25
42.96
Infeasible
Infeasible
Infeasible
Infeasible
Infeasible
Infeasible
39.25
42.96
42.25
41.62
40.34
40.20
40.19
40.19
39.25
42.96
Infeasible
Infeasible
Infeasible
Infeasible
Infeasible
Infeasible
39.25
42.96
41.59
40.70
40.16
40.13
40.13
40.13
39.25
42.96
Infeasible
Infeasible
Infeasible
Infeasible
Infeasible
Infeasible
39.25
42.96
41.24
40.58
40.12
39.70
39.70
39.70
39.25
42.96
41.24
40.58
40.12
39.70
Infeasible
Infeasible
39.25
42.96
41.24
40.58
40.12
39.70
39.52
39.28
39.25
42.96
41.24
40.58
40.12
39.70
Infeasible
39.28
39.25
155
a 0:1
fm
1
2
3
4
5
6
7
8
42.96
41.47
40.88
40.46
40.12
39.97
39.81
39.81
a 0:2
jfm1
fm j
%
fm
3.47
1.42
1.03
0.84
0.37
0.40
0.00
fm
42.96
41.65
41.13
40.71
40.47
40.40
40.33
40.33
a 0:3
jfm1
fm j
%
fm
3.05
1.25
1.02
0.59
0.17
0.17
0.00
jfm1
fm j
%
fm
42.96
41.86
41.35
40.95
40.80
40.80
40.80
40.80
min C k Alk h S lk L Bk S
a 0:4
fm
24
2.56
1.22
0.97
0.37
0.00
0.00
0.00
s:t:
fm
42.96
42.03
41.53
41.19
41.13
41.13
41.13
41.13
X l Lj elk L
k
Pk
j!
j6S1
S 2 Z
a 0:5
jfm1
fm j
%
fm
2.16
1.19
0.82
0.15
0.00
0.00
0.00
fm
42.96
42.15
41.68
41.43
41.43
41.43
41.43
41.43
jfm1
fm j
%
fm
1.89
1.12
0.60
0.00
0.00
0.00
0.00
25
26
In the cost function (24), A is the xed cost per order, lk is the average demand of coalition k per unit of time, h is the carrying cost, L is
the lead time and Bk S is the expected number of backorders given
P1
j lk L
by
=j!. Constraint (25) states a service level
jS j Slk L e
constraint, where the left-hand side IS is the ll-rate as a function
of S and k 2 0; 1 is a parameter expressing the target service level.
All these expressions come from standard formulae in inventory
control literature (see e.g. Hadley & Whitin, 1963). The solution to
this inventory control problem is simply the minimum positive
integer S that satises the service level constraint (25). This optimal base-stock level S can be computed by evaluating the ll-rate
starting from S 1 and consecutively increasing S by one, until the
target k is fullled. This procedure tends to nish quickly in inventory control of spare parts, where the optimal base-stock levels are
relatively low quantities. It not rarely happens that the optimal
base-stock level for a coalition is lower than the sum of the optimal
base-stock levels of its players standing alone and, therefore, the
potential for collaboration appears. We implement and solve this
inventory control problem by using Matlab. The solution to each
instance is obtained in a matter of a second. More details about this
case can be found in Guajardo et al. (2014) and Guajardo and
Rnnqvist (2014).
We test our models in an instance including 16 players (each
representing an inventory plant), 19 spare parts and 53 possible
coalitions. These coalitions result from limiting the possibilities
to only those where at least one item is used by all the players in
the same coalition. The resulting coalitions include 2 sets of 4 players, 13 sets of 3 players, 22 sets of 2 players and 16 single-player
coalitions. All players in this instance are somehow related with
each other, either because they can directly collaborate in a same
coalition or because another coalition includes one of its collaborator or another descendent in the collaborative relations. Therefore,
the problem of nding the best structure cannot be separated in
sub-problems for some players beforehand.
After having computed the costs C k for all coalition k 2 K, we
use them as parameters in the MIP models of Section 3. The coalition structure resulting from the optimal solution to model M1
without cardinality constraints (equivalently, when m 4),
includes eight coalitions as illustrated in Fig. 4. This structure also
solves model M2. What we believe is interesting from this instance
is that only one of the two coalitions of four players (the largest
cardinality of the possible coalitions) are part of the optimal solution. In fact, coalition fP1; P3; P4; P5g is not formed. Although P3
contributes to coalition fP1; P4; P5g (because the cost parameters
are such that C fP1;P3;P4;P5g 83; 424 < C fP3g C fP1;P4;P5g 90; 984),
more savings can be achieved if P3 leaves this coalition to join with
156
sense that the target service level for a coalition between players
i and j can be satised by a base-stock level lower than the sum
of the base-stock levels for the separate players. Because of the discrete nature of the base-stock level, the solution S to the inventory
control problem often provides some slack in constraint (25), that
is, lS > k. This encourages some players to nd collaborators to
share the inventory costs with, while conforming to the target service levels. These drivers explain that some of the players are especially good collaborators between each other. For example, player
P1 with P4; P2 with P3; P7 with P8 and P9 with P10, who as can
be seen in Fig. 4 remain together in the solution to all the instances.
4.3. Discussion
Fig. 4. Optimal coalition structures for different upper bounds m in the oil case.
Table 5
Optimal objective values, relative savings and cumulative savings in the problem on
inventory of spare parts for oil operations.
m
fm
f
m
1
2
3
4
561,083
395,250
384,004
378,810
561,083
Infeasible
384,004
378,810
jfm1
fm j
%
fm
jfm f1 j
%
jf8 f1 j
29.56
2.85
1.35
91
97
100
C Z jZj C
1 hi :
i2Z
Y
jZjx
C 1 hi ;
C Z jZj 1 a
jZj 1
i2Z
where a is a deector parameter (we use a 0:1) and x is a binary
random variable equally likely in f0; 1g.
Note the difference between these two sets of instances is given
by the penalty term involving the deector parameter a and a term
that, subject to x 1, increases with the number of players. This
attempts to consider that the implementation of larger coalitions
is likely to involve larger costs.
We set a time limit of 1 hour in each run of the models. For both
data set instances, we have veried in our computational experiments that the models turn to be directly solved at least for a number of players up to n 17. An example of how the solution time
varies with the cardinality bound is shown in Fig. 5. This gure
shows the solution times of both models for the second set of
instances with n 12. It can be observed that model M1 runs
quickly for all values of m. The instances that take longer times
to be solved are those corresponding to model M2 where the upper
bound on the maximum number of players per coalition lies
between m 6 and m 8. For all other values of m, model M2 runs
relatively fast, in no more than three minutes. We explain this relation between m and the time solutions by the combinatorial structure of the problem and the tendency of the optimal structure to
include coalitions of cardinality m or very close to it. Note when
m n, there is only one structure of cardinality m, obviously the
grand coalition. If the grand coalition is the optimal structure, we
157
Fig. 5. Solving times of models M1 (triangular markers) and M2 (circular markers) of the second set of instances for n 12 players.
158
5. Conclusions
Motivated by the context of collaborative logistics, we have formulated mixed integer linear programming models for coalition
structure and cost allocation. The models consist of a set partitioning problem together with stability constraints. These stability
constraints come from game theoretic principles, and consider
both core stability and strong stability. We have tested the models
in two applications; one in collaborative forest transportation and
one in inventory pooling of spare parts for oil and gas operations.
By running the models, we were able to determine coalition structures that satisfy the stability constraints at minimum cost, or, in
the strong stability problem, to determine whether the problem
has or not a feasible solution. If the latter is feasible, we have
proved that a same structure solves both the core stability and
the strong stability problems. The consideration or not of the
strong stability conditions can have important effects. In some
instances of the cases we have studied, it was veried that while
the core stability problem is solved, the strong stability problem
turned to be infeasible. This certainly can have practical implications, thus highlighting the notion of strong equilibrium in addition to the traditional core stability concept.
Our approach also allowed us to study the effects of restricting
the maximum cardinality of the coalitions contained in a structure.
We reported results where most of the savings from collaboration
are achieved by allowing a certain number of players in the coalitions. Still if the grand coalition achieved more savings than the
coalition structure subject to the maximum cardinality constraint,
in practice a decision maker should analyze whether these savings
overwhelm or not the managerial complexities of forming large
coalitions. In the forestry case, for example, we found that increasing the upper bound on the cardinality of the coalitions from 7 to 8
companies provided only 0.08% of relative savings.
Although previous literature in OR has incorporated game theoretic principles into collaborative problems, most of it has paid
attention to problems assuming the grand coalition is formed.
Instead of making this assumption, we approached the cost allocation problem simultaneously with the problem of nding an optimal coalition structure. A vast source of opportunities derives from
this research. First, although the coalition structure problem has
been studied in game theory for several decades, there appear to
be no particular solution methods to deal with the core stability
and strong stability problems with general characteristic functions.
Since this is basically a set partitioning problem subject to additional constraints, a direction for further research is to formulate
solution methods that could efciently nd the optimal structures
and cost allocation vectors. This is specially challenging in largescale problems, because the number of coalitions increases exponentially with the number of players. We have reported examples
where the models can be directly solved in short time including up
to 17 players and about 131,000 coalitions. Any further dimension
remains worthy of exploration. Second, it might be interesting to
set conditions for the uniqueness of the solution to these problems,
since beforehand there is no guarantee that the optimal structure
and the cost allocations are unique. Also, since the costs have been
assumed as parameters of the models, a natural extension is to
study the case where these parameters are exposed to some type
of uncertainty or where some data are missing. We have also
assumed a fully cooperative behavior of the players. Another
extension could consider the case where they can adopt non-cooperative or partly cooperative strategies. Finally, the implementation in practice of these types of models appears to be one of the
challenges for achieving the benets of collaboration. As referred
by Chen (2009), getting all players to agree on how to share costs
and benets was identied as one of the major barriers to
collaboration in practices on logistics and commerce. We believe
Acknowledgements
We thank Vivienne Bowery Knowles for her useful suggestions
that improved the writing of this article. We also thank the anonymous reviewers, whose comments helped us to improve the
article.
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