Transportation service procurement problem with transit time

•Investigate transit time in decision-making of transportation service procurement.•Develop a biobjective branch-and-bound algorithm and a sophisticated heuristic.•Compute all extreme supported nondominated solutions to form Pareto front.•Generate comprehensive test instance based on real data.•Discuss applications of algorithms in practical transportation service procurement.

In this work, we investigate transit time in transportation service procurement, which is conducted by shippers using auctions to purchase transportation service from carriers in the planning stage. Besides cost, we find that many shippers are most concerned with transit time in practice; shorter transit time indicates better transportation service. To minimize both the total cost and transit time, the problem faced by shippers is the biobjective transportation service procurement problem with transit time. To solve the problem, we introduce a biobjective integer programming model that can also accommodate some important business constraints. A biobjective branch-and-bound algorithm that finds all extreme supported nondominated solutions is developed. To speed up the algorithm, two fast feasibility checks, a network flow model for particular subproblems, and lower bounds from relaxation are proposed. In addition, a sophisticated heuristic is introduced to meet shipper’s requirements in some situations. Computational experiments on evaluating the performance of the algorithms are conducted on a set of test instances that are generated from practical data.