A Bilevel Analytical Model for Dynamic Storage Pricing in a Supply Hub in Industrial Park (SHIP).

A Supply Hub in Industrial Park (SHIP) is a third-party business entity that leases storage space and logistics services among manufacturers located in the same industrial park. Manufacturers may hire warehouses outside the park if SHIP's storage price is exorbitant. This paper discusses how SHIP and manufacturers interact to optimize their decisions on storage pricing, replenishment, and delivery. A dynamic storage pricing strategy depending on storage length is adopted. This problem is modeled as a bilevel program where the SHIP is the leader and manufacturers are followers. Based on further assumptions, the proposed bilevel model is solved in closed-form. A series of sensitivity analyses are conducted to examine the influences of major cost parameters. The results show that SHIP's delivery charge has little impact on the total cost of large manufacturers, and its increase will not always bring profit improvement to SHIP. Contrary to intuition, the SHIP could attract more space demands from large manufacturers when charging higher in delivery or when the public warehouse's delivery charge is lower, and more space demands from small manufacturers when the market storage price is lower. [ABSTRACT FROM PUBLISHER]