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The bidding selection and assignment problem with minimum quantity commitment

Author

Listed:
  • A Lim

    (Hong Kong University of Science and Technology)

  • Z Xu

    (Hong Kong University of Science and Technology)

  • F Wang

    (Hong Kong University of Science and Technology
    Sun Yat-Sen University)

Abstract

This paper studies the bidding selection and assignment problem with a novel constraint, namely minimum quantity commitment (MQC), motivated by the Royal Philips Electronics Company. Responding to the stipulations by the US Federal Maritime Commission, any shipping agent transporting to the US must satisfy a minimum quantity of containers. To insure this MQC for shipping agents, the Royal Philips Electronics Company, with a large number of shipping needs, has to assign enough containers to each selected shipping agent to transport cargos to the US. This restriction creates difficulties for Philips as the company seeks to satisfy its shipping needs with minimum total costs. To solve this problem, we first formulate it by a mixed-integer programming model. In order for both linear programming relaxation and Lagrangian relaxation to provide good lower bounds, we then strengthen the model by a few valid inequalities. Furthermore, a Lagrangian-based heuristic and a branch and cut solver are applied to solve the problem. Extensive experiments show the effectiveness of all the models and methods.

Suggested Citation

  • A Lim & Z Xu & F Wang, 2008. "The bidding selection and assignment problem with minimum quantity commitment," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 59(5), pages 693-702, May.
    • Handle: RePEc:pal:jorsoc:v:59:y:2008:i:5:d:10.1057_palgrave.jors.2602380
    DOI: 10.1057/palgrave.jors.2602380
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    References listed on IDEAS

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    1. Aardal, K.I. & van Hoesel, S., 1995. "Polyhedral Techniques in Combinatorial Optimization," Other publications TiSEM ed028a07-eb6a-4c8d-8f21-d, Tilburg University, School of Economics and Management.
    2. Aardal, K.I. & van Hoesel, S., 1995. "Polyhedral Techniques in Combinatorial Optimization," Discussion Paper 1995-57, Tilburg University, Center for Economic Research.
    3. Hanif D. Sherali & Intesar Al-Loughani & Shivaram Subramanian, 2002. "Global Optimization Procedures for the Capacitated Euclidean and l p Distance Multifacility Location-Allocation Problems," Operations Research, INFORMS, vol. 50(3), pages 433-448, June.
    4. Aardal, K. & van Hoesel, C.P.M., 1995. "Polyhedral techniques in combinatorial optimization," Research Memorandum 014, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
    5. Anantaram Balakrishnan & Joseph Geunes, 2003. "Production Planning with Flexible Product Specifications: An Application to Specialty Steel Manufacturing," Operations Research, INFORMS, vol. 51(1), pages 94-112, February.
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    Cited by:

    1. Dellbrügge, Marius & Brilka, Tim & Kreuz, Felix & Clausen, Uwe, 2022. "Auction design in strategic freight procurement," Chapters from the Proceedings of the Hamburg International Conference of Logistics (HICL), in: Kersten, Wolfgang & Jahn, Carlos & Blecker, Thorsten & Ringle, Christian M. (ed.), Changing Tides: The New Role of Resilience and Sustainability in Logistics and Supply Chain Management – Innovative Approaches for the Shift to a New , volume 33, pages 295-325, Hamburg University of Technology (TUHH), Institute of Business Logistics and General Management.

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