MODELLING UNCERTAINTY IN TWO-TIER CITY LOGISTICS SYSTEMS Nicoletta Ricciardi 1 , Teodor Gabriel Crainic 2 , Fausto Errico 2 ,Walter Rei 2 1. Introduction City Logistics aims to reduce the nuisances associated to freight transportation in urban areas while supporting the economic and social development of the cities. The fundamental idea is to view individual stakeholders and decisions as components of an integrated logistics system. This implies the coordination of shippers, carriers, and movements as well as the consolidation of loads of several customers and carriers into the same environment-friendly vehicles. City Logistics explicitly aims to optimize such advanced urban transportation systems. The transportation of goods constitutes a major enabling factor for most economic and social activities taking place in urban areas. For the city inhabitants, it supplies stores and places of work and leisure, delivers goods at home, provides the means to get rid of refuse, an so on. For firms established within city limits, it forms a vital link with suppliers and customers. Indeed, there are few activities going on in a city that do not require at least some commodities being moved. Yet, freight transportation is also a major disturbing factor to urban life (OECD, 2003). Logistics is currently understood to target the analysis, planning, and management of integrated and coordinated physical, informational, and decisional ows within a potentially multi-partner value network. It is from this view that 1 Dipt. di Statistica, Probabilità e Statistiche Applicate,Sapienza, Università di Roma, Italy, nicoletta.ricciardi@uniroma1.it 2 Dept. management et technologie Ecole des sciences de la gestion, UQAM, Montréal, Canada and Interuniversity Centre for Enterprise Networks, Logistics and Transportation (CIRRELT), {TeodorGabriel.Cranic, Walter.Rei, Fausto.Errico}@cirrelt.ca 2 2