Service Network Design Under Static Competitive Conditions: Optimizing Route Selection and Market Share Allocation Using A Logit Function

Authors

https://doi.org/10.48314/anowa.v1i3.55

Abstract

Transportation is one of the most important aspects of human activity, supporting a wide range of social and economic transactions. Meanwhile, to remain competitive, freight transportation businesses and logistics providers must deliver high-quality, reliable, and effective services. The effective design of the service network in this industry necessitates strategic and tactical decisions regarding service frequency, optimal route selection, and market share allocation among companies. In this study, we have examined static competition between two transportation companies using a Mixed-Integer Nonlinear Programming (MINLP) model. The competition is studied by calculating entrants’ service frequency and each company’s market share using a logit function. In this type of competition, the incumbent’s route selection and frequency decisions are known in advance, and our goal is to maximize the new market entrant's profits. Additionally, several constraints have been considered, including route capacities, the maximum allowable frequency on each link, and penalty costs for incomplete utilization of route capacities. To evaluate and validate the model, real-world data from the Iranian Road Maintenance and Transportation Organization has been employed. Furthermore, during the sensitivity analysis phase, the effects of varying key parameters on the model's outputs were evaluated. This investigation aims to improve understanding of the system's dynamics and clarify how these factors influence optimal decision-making processes. 

Keywords:

Service network design, Static competition, Logit function

References

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Published

2025-09-28

Issue

Vol. 1 No. 3 (2025): Annals of Optimization With Applications (ANOWA)

Section

Articles

How to Cite

Ebrahimi Shahpar , N. ., & Nikbakhsh, E. . (2025). Service Network Design Under Static Competitive Conditions: Optimizing Route Selection and Market Share Allocation Using A Logit Function. Annals of Optimization With Applications, 1(3), 192-203. https://doi.org/10.48314/anowa.v1i3.55

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