THE TRAVELING SALESMAN GAME - AN APPLICATION OF COST ALLOCATION IN A GAS AND OIL COMPANY

In this article, a cost allocation problem that arises in a distributi on planning situation at the Logistics Department at Norsk Hydro Olje AB is studied. A specific tour is considered, for which the total dist ribution cost is to be divided among the customers that are visited. T his problem is formulated as a traveling salesman game, and cc st allo cation methods based on different concepts from cooperative game theor y, such as the nucleolus, the Shapley value and the tau-value, are dis cussed. Additionally, a new concept is introduced: the demand nucleolu s. Computational results for the Norsk Hydro case are presented and di scussed.