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Approximation algorithms for the bid construction problem in combinatorial auctions for the procurement of freight transportation contracts

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  • Song, Jiongjiong
  • Regan, Amelia
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    Abstract

    Trucking companies (carriers) are increasingly facing combinatorial auctions conducted by shippers seeking contracts for their transportation needs. The bid valuation and construction problem for carriers facing these combinatorial auctions is very difficult and involves the computation of a number of NP-hard sub problems. In this paper we examine computationally tractable approximation methods for estimating these values and constructing bids. The benefit of our approximation method is that it provides a way for carriers to discover their true costs and construct optimal or near optimal bids by solving a single NP-hard problem. This represents a significant improvement in computational efficiency. We examine our method both analytically and empirically using a simulation based analysis.

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    Bibliographic Info

    Article provided by Elsevier in its journal Transportation Research Part B: Methodological.

    Volume (Year): 39 (2005)
    Issue (Month): 10 (December)
    Pages: 914-933

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    Handle: RePEc:eee:transb:v:39:y:2005:i:10:p:914-933

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    1. Bykowsky, Mark M & Cull, Robert J & Ledyard, John O, 2000. "Mutually Destructive Bidding: The FCC Auction Design Problem," Journal of Regulatory Economics, Springer, vol. 17(3), pages 205-28, May.
    2. McAfee, R Preston & McMillan, John, 1987. "Auctions and Bidding," Journal of Economic Literature, American Economic Association, vol. 25(2), pages 699-738, June.
    3. Jeffrey S. Banks & John O. Ledyard & David P. Porter, 1989. "Allocating Uncertain and Unresponsive Resources: An Experimental Approach," RAND Journal of Economics, The RAND Corporation, vol. 20(1), pages 1-25, Spring.
    4. Michael H. Rothkopf & Aleksandar Peke\v{c} & Ronald M. Harstad, 1998. "Computationally Manageable Combinational Auctions," Management Science, INFORMS, vol. 44(8), pages 1131-1147, August.
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    Cited by:
    1. van Duin, J.H.R. & Tavasszy, L.A. & Taniguchi, E., 2007. "Real time simulation of auctioning and re-scheduling processes in hybrid freight markets," Transportation Research Part B: Methodological, Elsevier, vol. 41(9), pages 1050-1066, November.
    2. van de Klundert, Joris & Otten, Bernhard, 2011. "Improving LTL truck load utilization on line," European Journal of Operational Research, Elsevier, vol. 210(2), pages 336-343, April.
    3. Xu, Su Xiu & Huang, George Q., 2013. "Transportation service procurement in periodic sealed double auctions with stochastic demand and supply," Transportation Research Part B: Methodological, Elsevier, vol. 56(C), pages 136-160.
    4. Lim, Andrew & Qin, Hu & Xu, Zhou, 2012. "The freight allocation problem with lane cost balancing constraint," European Journal of Operational Research, Elsevier, vol. 217(1), pages 26-35.
    5. Mesa-Arango, Rodrigo & Ukkusuri, Satish V., 2013. "Benefits of in-vehicle consolidation in less than truckload freight transportation operations," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 60(C), pages 113-125.
    6. Chang, Tsung-Sheng, 2009. "Decision support for truckload carriers in one-shot combinatorial auctions," Transportation Research Part B: Methodological, Elsevier, vol. 43(5), pages 522-541, June.
    7. Garrido, Rodrigo A., 2007. "Procurement of transportation services in spot markets under a double-auction scheme with elastic demand," Transportation Research Part B: Methodological, Elsevier, vol. 41(9), pages 1067-1078, November.

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