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cost allocation in collaborative forest transportation
Transportation planning is an important part of the supply chain or wood flow chain in forestry. There are often several forest companies operating in the same region and collaboration between two or more companies is rare. However, there is an increasing interest in collaborative planning as the potential savings are large, often in the range 5-15%. There are several issues to agree on before such collaborative planning can be used in practice. A key question is how savings or costs should be distributed among the participants. In this seminar we will play a cost allocation game based on a case with eight participating companies. The purpose is to get an understanding of the principles and problems arising in the negotiation and splitting process. In the follow up we will discuss these issues and show a number of possibilities for cost sharing based on economic models.