IDEAS home Printed from https://ideas.repec.org/a/inm/ormnsc/v53y2007i8p1345-1358.html
   My bibliography  Save this article

A Market-Based Optimization Algorithm for Distributed Systems

Author

Listed:
  • Zhiling Guo

    (Department of Information Systems, University of Maryland, Baltimore County, Baltimore, Maryland 21250)

  • Gary J. Koehler

    (Department of Decision and Information Sciences, Warrington College of Business Administration, University of Florida, Gainesville, Florida 32611)

  • Andrew B. Whinston

    (Department of Information, Risk, and Operations Management, McCombs School of Business, The University of Texas at Austin, Austin, Texas 78712)

Abstract

In this paper, a market-based decomposition method for decomposable linear systems is developed. The solution process iterates between a master problem that solves the market-matching problem, and subproblems that solve the agents' bundle-determination problems. Starting from any initial price and feasible allocation, system optimality can be achieved under a dynamic market-trading algorithm in a finite number of trades. The final market-clearing prices are discovered by this market trading and an efficient allocation is achieved by direct, wealth-improving resource exchanges among self-interested agents. Certain types of strategic behavior by the agents and a dealer in the marketplace are studied as well. Our proposed market mechanism addresses price dynamics, incentive issues, and economic transactions of real-world, distributed decision-making situations more realistically than traditional decomposition approaches. In addition, it can be operated in both synchronous and asynchronous environments. We provide a market-based paradigm for decentralized problem solving and information processing that can be easily implemented to support real-time optimization of distributed systems.

Suggested Citation

  • Zhiling Guo & Gary J. Koehler & Andrew B. Whinston, 2007. "A Market-Based Optimization Algorithm for Distributed Systems," Management Science, INFORMS, vol. 53(8), pages 1345-1358, August.
    • Handle: RePEc:inm:ormnsc:v:53:y:2007:i:8:p:1345-1358
    DOI: 10.1287/mnsc.1060.0690
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1287/mnsc.1060.0690
    Download Restriction: no
    File URL: https://libkey.io/10.1287/mnsc.1060.0690?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Dimitri P. Bertsekas, 1990. "The Auction Algorithm for Assignment and Other Network Flow Problems: A Tutorial," Interfaces, INFORMS, vol. 20(4), pages 133-149, August.
    2. Myerson, Roger B. & Satterthwaite, Mark A., 1983. "Efficient mechanisms for bilateral trading," Journal of Economic Theory, Elsevier, vol. 29(2), pages 265-281, April.
    3. P. C. Gilmore & R. E. Gomory, 1961. "A Linear Programming Approach to the Cutting-Stock Problem," Operations Research, INFORMS, vol. 9(6), pages 849-859, December.
    4. Ming Fan & Jan Stallaert & Andrew B. Whinston, 2003. "Decentralized Mechanism Design for Supply Chain Organizations Using an Auction Market," Information Systems Research, INFORMS, vol. 14(1), pages 1-22, March.
    5. Michael H. Rothkopf & Aleksandar Pekev{c} & Ronald M. Harstad, 1998. "Computationally Manageable Combinational Auctions," Management Science, INFORMS, vol. 44(8), pages 1131-1147, August.
    6. George B. Dantzig & Philip Wolfe, 1960. "Decomposition Principle for Linear Programs," Operations Research, INFORMS, vol. 8(1), pages 101-111, February.
    7. Jérémie Gallien & Lawrence M. Wein, 2005. "A Smart Market for Industrial Procurement with Capacity Constraints," Management Science, INFORMS, vol. 51(1), pages 76-91, January.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Demetriou, Demetris, 2018. "Automating the land valuation process carried out in land consolidation schemes," Land Use Policy, Elsevier, vol. 75(C), pages 21-32.
    2. Leon Yang Chu, 2009. "Truthful Bundle/Multiunit Double Auctions," Management Science, INFORMS, vol. 55(7), pages 1184-1198, July.
    3. Zhiling Guo & Gary J. Koehler & Andrew B. Whinston, 2012. "A Computational Analysis of Bundle Trading Markets Design for Distributed Resource Allocation," Information Systems Research, INFORMS, vol. 23(3-part-1), pages 823-843, September.
    4. Lai, Minghui & Cai, Xiaoqiang & Hu, Qian, 2017. "An iterative auction for carrier collaboration in truckload pickup and delivery," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 107(C), pages 60-80.
    5. Minghui Lai & Weili Xue & Qian Hu, 2019. "An Ascending Auction for Freight Forwarder Collaboration in Capacity Sharing," Transportation Science, INFORMS, vol. 53(4), pages 1175-1195, July.
    6. Ioannis Petrakis & Georg Ziegler & Martin Bichler, 2013. "Ascending Combinatorial Auctions with Allocation Constraints: On Game Theoretical and Computational Properties of Generic Pricing Rules," Information Systems Research, INFORMS, vol. 24(3), pages 768-786, September.
    7. Andor Goetzendorff & Martin Bichler & Pasha Shabalin & Robert W. Day, 2015. "Compact Bid Languages and Core Pricing in Large Multi-item Auctions," Management Science, INFORMS, vol. 61(7), pages 1684-1703, July.
    8. Martin Bichler & Pasha Shabalin & Georg Ziegler, 2013. "Efficiency with Linear Prices? A Game-Theoretical and Computational Analysis of the Combinatorial Clock Auction," Information Systems Research, INFORMS, vol. 24(2), pages 394-417, June.
    9. Lai, Minghui & Cai, Xiaoqiang & Li, Xiang, 2017. "Mechanism design for collaborative production-distribution planning with shipment consolidation," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 106(C), pages 137-159.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Zhiling Guo & Gary J. Koehler & Andrew B. Whinston, 2012. "A Computational Analysis of Bundle Trading Markets Design for Distributed Resource Allocation," Information Systems Research, INFORMS, vol. 23(3-part-1), pages 823-843, September.
    2. Ming Fan & Jan Stallaert & Andrew B. Whinston, 2003. "Decentralized Mechanism Design for Supply Chain Organizations Using an Auction Market," Information Systems Research, INFORMS, vol. 14(1), pages 1-22, March.
    3. Leon Yang Chu, 2009. "Truthful Bundle/Multiunit Double Auctions," Management Science, INFORMS, vol. 55(7), pages 1184-1198, July.
    4. Sankaran, Jayaram K., 1995. "Column generation applied to linear programs in course registration," European Journal of Operational Research, Elsevier, vol. 87(2), pages 328-342, December.
    5. François Clautiaux & Cláudio Alves & José Valério de Carvalho & Jürgen Rietz, 2011. "New Stabilization Procedures for the Cutting Stock Problem," INFORMS Journal on Computing, INFORMS, vol. 23(4), pages 530-545, November.
    6. Omid Shahvari & Rasaratnam Logendran & Madjid Tavana, 2022. "An efficient model-based branch-and-price algorithm for unrelated-parallel machine batching and scheduling problems," Journal of Scheduling, Springer, vol. 25(5), pages 589-621, October.
    7. Ibrahim Muter & Tevfik Aytekin, 2017. "Incorporating Aggregate Diversity in Recommender Systems Using Scalable Optimization Approaches," INFORMS Journal on Computing, INFORMS, vol. 29(3), pages 405-421, August.
    8. Barry C. Smith & Ellis L. Johnson, 2006. "Robust Airline Fleet Assignment: Imposing Station Purity Using Station Decomposition," Transportation Science, INFORMS, vol. 40(4), pages 497-516, November.
    9. Bourbeau, Benoit & Gabriel Crainic, Teodor & Gendreau, Michel & Robert, Jacques, 2005. "Design for optimized multi-lateral multi-commodity markets," European Journal of Operational Research, Elsevier, vol. 163(2), pages 503-529, June.
    10. Fırat, M. & Briskorn, D. & Laugier, A., 2016. "A Branch-and-Price algorithm for stable workforce assignments with hierarchical skills," European Journal of Operational Research, Elsevier, vol. 251(2), pages 676-685.
    11. Sven de Vries & Rakesh Vohra, 2000. "Combinatorial Auctions: A Survey," Discussion Papers 1296, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    12. Schnizler, Bjorn & Neumann, Dirk & Veit, Daniel & Weinhardt, Christof, 2008. "Trading grid services - a multi-attribute combinatorial approach," European Journal of Operational Research, Elsevier, vol. 187(3), pages 943-961, June.
    13. Klose, Andreas & Gortz, Simon, 2007. "A branch-and-price algorithm for the capacitated facility location problem," European Journal of Operational Research, Elsevier, vol. 179(3), pages 1109-1125, June.
    14. Figielska, Ewa, 2014. "A heuristic for scheduling in a two-stage hybrid flowshop with renewable resources shared among the stages," European Journal of Operational Research, Elsevier, vol. 236(2), pages 433-444.
    15. Timo Gschwind & Stefan Irnich, 2014. "Dual Inequalities for Stabilized Column Generation Revisited," Working Papers 1407, Gutenberg School of Management and Economics, Johannes Gutenberg-Universität Mainz, revised 23 Jul 2014.
    16. Víctor M. Albornoz & Gabriel E. Zamora, 2021. "Decomposition-based heuristic for the zoning and crop planning problem with adjacency constraints," TOP: An Official Journal of the Spanish Society of Statistics and Operations Research, Springer;Sociedad de Estadística e Investigación Operativa, vol. 29(1), pages 248-265, April.
    17. Peng, Zixuan & Shan, Wenxuan & Zhu, Xiaoning & Yu, Bin, 2022. "Many-to-one stable matching for taxi-sharing service with selfish players," Transportation Research Part A: Policy and Practice, Elsevier, vol. 160(C), pages 255-279.
    18. Syam Menon & Rakesh Gupta, 2008. "Optimal Broadcast Scheduling in Packet Radio Networks via Branch and Price," INFORMS Journal on Computing, INFORMS, vol. 20(3), pages 391-399, August.
    19. Xu Lang & Zaifu Yang, 2021. "Reduced-Form Allocations for Multiple Indivisible Objects under Constraints: A Revision," Discussion Papers 21/05, Department of Economics, University of York.
    20. Delorme, Maxence & Iori, Manuel & Martello, Silvano, 2016. "Bin packing and cutting stock problems: Mathematical models and exact algorithms," European Journal of Operational Research, Elsevier, vol. 255(1), pages 1-20.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:inm:ormnsc:v:53:y:2007:i:8:p:1345-1358. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Asher (email available below). General contact details of provider: https://edirc.repec.org/data/inforea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.