Carrying capacity procurement of rail and shipping services for automobile delivery with uncertain demand

• A practical automobile delivery problem with uncertain demand.
• Carrying capacity procurement of rail and shipping service.
• Two-stage stochastic programming model.
• Improved sample average approximation method.

The determination of the optimal carrying capacity procurement of rail and shipping services in the automobile intermodal network with unique characteristics is essential to save automobile delivery cost. In this research we develop a two-stage stochastic programming model for the tactical-level decision problem arising in the special automobile intermodal network. Furthermore, we improve the sample average approximation algorithmic procedure to solve the model. We apply the model and solution method to a case study associated with the Shanghai Automobile Industry Corporation. We believe that this study deals with an emerging new research topic with practical significance for the automobile industry.