Decision method for the optimal number of logistics service providers with service quality guarantee and revenue fairness

This study investigates the problem that logistics service integrator (LSI) selects the optimal number of its functional logistics service providers (FLSPs) based on the service quality defect guarantee promised by FLSP and the revenue fairness concerns of LSI. This paper introduces a fairness entropy function to establish a new game model for determining the optimal number of FLSPs. Some conclusions about the impact of parameters on the optimal number of FLSPs are proposed with numerical analysis. For example, as the fairness constraints are satisfied, LSI prefers FLSPs who have higher level of business capacity which results a smaller number of FLSPs.