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An optimal efficient multi-attribute auction for transportation procurement with carriers having multi-unit supplies

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  • Zhang, Juliang
  • Xiang, Jie
  • Cheng, T.C. Edwin
  • Hua, Guowei
  • Chen, Cheng

Abstract

This paper studies optimal efficient multi-attribute (price, delivery time, and service quality) transportation procurement auction design, given that the carriers have multi-unit supplies. A shipper wants to procure a certain amount of transportation service from a set of potential carriers that have private information on their own unit costs, transportation time, supply capacity, and service quality. We propose an auction to minimize the total cost incurred from procurement, delivery delay, and low service quality. We show that the auction is incentive-compatible, individually-rational, and allocative-efficient. Moreover, we discuss the optimality of the mechanism and show that it minimizes the shipper's expected cost among all the efficient mechanisms that are incentive-compatible and individually-rational. This study is the first that proposes an optimal and efficient multi-attribute multi-unit auction for transportation procurement in the setting where the carriers have multi-unit supplies and their capacity information is private.

Suggested Citation

  • Zhang, Juliang & Xiang, Jie & Cheng, T.C. Edwin & Hua, Guowei & Chen, Cheng, 2019. "An optimal efficient multi-attribute auction for transportation procurement with carriers having multi-unit supplies," Omega, Elsevier, vol. 83(C), pages 249-260.
    • Handle: RePEc:eee:jomega:v:83:y:2019:i:c:p:249-260
    DOI: 10.1016/j.omega.2018.06.010
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    4. Yu, Hao & Huang, Min & Chao, Xiuli & Yue, Xiaohang, 2022. "Truthful multi-attribute multi-unit double auctions for B2B e-commerce logistics service transactions," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 164(C).
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    6. Guo, Jiantao & Zhang, Juliang & Cheng, T.C.E. & Zhao, Shouting, 2022. "Truthful double auction mechanisms for online freight platforms with transaction costs," Transportation Research Part B: Methodological, Elsevier, vol. 158(C), pages 164-186.
    7. Xiao, Fei & Wang, Haijun & Guo, Shuojia & Guan, Xu & Liu, Baoshan, 2021. "Efficient and truthful multi-attribute auctions for crowdsourced delivery," International Journal of Production Economics, Elsevier, vol. 240(C).
    8. Fang Yang & Yao-Huei Huang, 2021. "An optimization approach for winner determination problem considering transportation cost discounts," Journal of Global Optimization, Springer, vol. 80(3), pages 711-728, July.
    9. Jie Xiang & Juliang Zhang & T. C. E. Cheng & Jose Maria Sallan & Guowei Hua, 2019. "Efficient Multi-Attribute Auctions Considering Supply Disruption," Asia-Pacific Journal of Operational Research (APJOR), World Scientific Publishing Co. Pte. Ltd., vol. 36(03), pages 1-28, June.
    10. Lau, Hoong Chuin & Li, Baoxiang, 2021. "Solving the winner determination problem for online B2B transportation matching platforms," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 150(C).
    11. Aijun Liu & Yaxuan Xiao & Zengxian Li & Ruiyao Wang, 2022. "An agent‐based multiattribute reverse auction approach for online secondhand commodities," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(1), pages 129-145, January.

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