Medium-Term Pricing and Operations Planning in Intermodal Transportation

Motivated by a real application that requires effective medium-term planning in intermodal transportation, we develop a mathematical programming model that jointly considers pricing and operations planning. Building on available work from marketing and transportation literature, we develop a new method for considering pricing, as well as develop distinctly different operations submodels that are appropriate for this context. We solve the resulting nonlinear optimization problem (with continuous and 0-1 variables) to optimality through a decomposition that exploits the structure of subproblems. Computational testing on industrial-sized problems shows that our algorithm is very quick, allowing for effective scenario testing and “what-if” analysis.