SUSTAINABLE COLLABORATION MODEL WITH MONOPOLY OF SERVICE CENTERS IN EXPRESS DELIVERY SERVICES BASED ON SHAPLEY VALUE ALLOCATION

Abstract

Delivery amounts in the Korean express service market are constantly increasing, in spite of the long-term downturn and slow growth in most of the industries. This saturated market, where a large number of companies are entering the delivery service market, leads to severe competition among small and medium-sized express delivery companies. Economies of scale created through collaboration incur the reduction of operational cost. This cooperation among service centers may also lead to increment in net profit of participating companies. This study proposes a sustainable collaboration model with which service centers will still be opened or closed in merging regions with low demand in express delivery services. In addition, in the process of forming coalitions in express delivery services, Shapley value is applied to give fair allocation to each company based on its marginal contribution. An example problem is given to verify the appropriateness of the suggested collaboration model.