Aggregate-disaggregate approach to an airfreight forwarder's planning under uncertainty: a case study

Resource planning of airfreight forwarders is a complex endeavor, requiring decisions to be made in a dynamic and uncertain environment. Airfreight forwarders acquire airfreight spaces from three sources: allotment from carriers, retail from carriers and subcontracting to partners, all of which differ in terms of cost, flexibility and timing of booking. This real-life problem has many planning decisions (bookings in terms of carriers, route, time, ULDs, etc.). In this case study, we propose an aggregate-disaggregate approach and focus on the most critical decisions. A two-stage stochastic dynamic program first determines, in aggregates, the amount of allotment bookings, retail resources, and subcontracting or surplus co-loading. Then, a heuristic is used to disaggregate resource requirements into specific bookings. An analysis is provided to examine the relevant managerial issues. Based on real-life data, we show several patterns of aggregate resource bookings with respect to different levels of demand uncertainty and cost parameters. We show that resource disaggregation has to balance cost-effectiveness, capacity flexibility and routing flexibility of a resource plan.