Study On Shipment Insurance Strategy For Logistics Service Considering Customer's Behavior

The logistics companies and the customers are both disturbed by the lost cargo and the compensation problem caused by transportation and logistics disruption risk in the express industry and airline transportation,especially for the high-value cargo.Unconditional compensation obstructs the development process of the logistics companies.And limit compensation damages the interests of the customers.The mechanism of shipment insurance is simple: A logistics company first offers a customer a shipment insurance contract.Based on the contract format and his preference,the customer then decides either to accept or to reject the shipment insurance contract.If he chooses to accept it,he will declare a cargo value and pay the corresponding premium.Finally,if there is no disruption,the ex-ante premium sinks.However,if disruption occurs and the cargo is lost,he will receive an ex-post compensation based on the previously declared value.The mechanism of declared value overcomes the compensation difficulties after logistics disruption for the logistics company.Moreover,shipment insurance safeguards the economic interests and freedom for both logistics companies and customers in a wide range of logistics activities.However it lacks academic research.The innovational content of this dissertation mainly contains Chapter 3 and Chapter 4,as well as Chapter 5.These three parts mainly study the customer's behavior and the logistics company's pricing strategy under the linear and nonlinear insurance contracts based on the goals of maximizing the expected profit of the logistics company and maximizing the customer's utility.This dissertation uses several methods,such as game theory,mean-variance(MV),mathematical analysis,functional analysis and ordinary differential equation(ODE)and numerical experiment.And we also provide several supports for the logistics company from the perspectives of marketing and operation.This dissertation first analyzes the customer's behavior in the market.The customers usually expect their cargoes to arrive at the destination in good status when they consign the cargoes.Therefore,the customer in this paper is assumed to be risk-averse in the context of logistics disruption risk.This chapter first describes the customer's attributes,such as the risk-aversion coefficient.MV theory is used to develop the utility model for the risk-averse customer under the linear shipment insurance contract.Then the quantitative relation between the declared value and actual cargo value is obtained.The conclusions show that: The declared value will be lower than the true cargo value when the premium rate is higher than the customer's estimated value of the logistics disruption probability.Under this circumstance,the customer will declare the value not exceeding the true cargo value.According to this conclusion and two kinds of shipment insurance contract formats widely existing at present,two contracts are designed: Multiplicative contract and Additive contract.Under the multiplicative contract,the customer's declared value is strictly less than the true cargo value.Under the additive contract,the customer will reveal the true cargo value.We further obtain the threshold values to accept or to reject these two linear contracts for the customer.The conclusion shows that,the customer will accept shipment insurance service only when the true cargo value is higher than the threshold values.This research reveals the necessary condition that the customer will voluntarily declare his cargo value not exceeding the true cargo value.Moreover it answers the question that when the customer will accept the shipment insurance.Also,the problem that how to declare the cargo value is solved.The optimal pricing strategies of the logistics company under the multiplicative contract and the additive contract are also studied.The multiplicative contract and the additive contract successfully solve the problem of limiting the customer's declared value for the logistics company.Thus we only discuss about these two specific linear contracts.We first establish the expected profit model for the logistics company under these two contracts.And the optimal solutions and pricing strategies are derived.Then we conduct several numerical experiments to demonstrate the rationality of the previously theoretical results.After that,we analyze the influence of all the customer's attributes and the logistics disruption probability on the expected profit of the logistics company.Furthermore,we also distinguish between the multiplicative contract and the additive contract.This research shows that the logistics company should provide the multiplicative contract if the customer thinks the logistics disruption probability to be low.When the customer's estimated value of the logistics disruption probability is high,he needs to distinguish between these two contracts according to the real cargo value.If the cargo value is low,the additive contract dominates the multiplicative contract.When the cargo value is relatively high,the logistics company prefers the former.Most importantly,it is critical for the logistics company to acquire information about the actual cargo value before choosing between the two shipment insurance contracts.In order to study the case that the logistics company may take initiatives to improve the transportation process after the shipment insurance service is accepted,we assume that the disruption probability depends on the investment cost and find that if the customer has less willingness to accept the contract,then the logistics company should reduce effort towards transportation improvement.Another important issue that we discuss in this study is nonlinear shipment insurance contract.Assume that the ex-ante premium and the ex-post compensation are both arbitrary function forms of the customer's declared value.Then the customer's utility function model and the expected profit model of the logistics company are established.Based on these models,we derive the threshold value to accept or to reject the nonlinear insurance contract for the customer.The conclusion indicates that the nonlinear contract is accepted only when the real cargo value is higher than the threshold value.After that,we then put forward the necessary condition for the customer to reveal the real cargo value under the nonlinear contract.Finally,the optimal pricing strategy is given by functional analysis.This extension pays more attention to theoretical innovation and apply several new mathematical methods to the management field,such as functional analysis and Euler equation.