Manufacturers have increasingly employed a logistics provider or a carrier to transport their products. This practice enables manufacturers to focus on their core compe-tency, to leverage against transportation fees, and to reduce their operational capitals. At the same time, a carrier benefits from economies of scale and creates values to manufacturers as a freight delivery specialist. In general, a manufacturer and a carrier agree upon a number of daily shipments. A carrier, in turn,

more »

... its dedicated trucks to serve agreed shipments. One important issue of such practice is high variability in trucking capacity resulted from the fluctuation in a number of shipments requested by manufacturers and the failure to cooperate delivery planning between both parties. As a result, a carrier struggles between two extreme cases. On one extreme, it may allocate too many trucks thereby under-utilizing its trucking capacity and missing opportunities to create more revenues from other shipments. On the other, a carrier may have insufficient trucks thereby incurring a contract penalty. The economic trade-off between opportunity cost to utilize allocated trucks and contract penalty can be viewed as the Newsvendor problem, an inventory control model with a stochastic demands. This article generalizes the concept allowing a carrier to serve other customers when agreed shipments exceed manufacturer's requests. We modeled this generalization as a multi-channel demand Newsvendor problem and illustrated the model using the transportation data of a beverage manufacturer and a large carrier. The analysis of the model showed that the carrier can reduce its transportation costs by a better delivery planning and increase revenues by an exploring shipment from other potential customers.