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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, A C

Abstract

The bid valuation and construction problem for carriers facing combinatorial auctions for the procurement of freight transportation contracts 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 construct optimal or near optimal bids by solving a single NP-hard problem. This represents a significant improvement in efficiency. In addition, this method can be extended to many other applications.

Suggested Citation

  • Song, Jiongjiong & Regan, A C, 2003. "Approximation Algorithms for the Bid Construction Problem in Combinatorial Auctions for the Procurement of Freight Transportation Contracts," University of California Transportation Center, Working Papers qt3j7034z2, University of California Transportation Center.
  • Handle: RePEc:cdl:uctcwp:qt3j7034z2
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    References listed on IDEAS

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    1. Babaioff, Moshe & Feldman, Michal & Nisan, Noam & Winter, Eyal, 2012. "Combinatorial agency," Journal of Economic Theory, Elsevier, vol. 147(3), pages 999-1034.
    2. Anthony M. Kwasnica & John O. Ledyard & Dave Porter & Christine DeMartini, 2005. "A New and Improved Design for Multiobject Iterative Auctions," Management Science, INFORMS, vol. 51(3), pages 419-434, March.
    3. 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 205-228, May.
    4. John O. Ledyard & Mark Olson & David Porter & Joseph A. Swanson & David P. Torma, 2002. "The First Use of a Combined-Value Auction for Transportation Services," Interfaces, INFORMS, vol. 32(5), pages 4-12, October.
    5. Regan, A C & Song, Jiongjiong, 2003. "Combinatorial Auctions for Transportation Service Procurement: The Carrier Perspective," University of California Transportation Center, Working Papers qt7sq003mj, University of California Transportation Center.
    6. Michael H. Rothkopf & Aleksandar Pekev{c} & Ronald M. Harstad, 1998. "Computationally Manageable Combinational Auctions," Management Science, INFORMS, vol. 44(8), pages 1131-1147, August.
    7. S.J. Rassenti & V.L. Smith & R.L. Bulfin, 1982. "A Combinatorial Auction Mechanism for Airport Time Slot Allocation," Bell Journal of Economics, The RAND Corporation, vol. 13(2), pages 402-417, Autumn.
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    Cited by:

    1. Song, Jiongjiong & Regan, Amelia C. & Nandiraju, Srinivas, 2008. "A Bid Analysis Model with Business Constraints for Transportation Procurement Auctions," University of California Transportation Center, Working Papers qt24817929, University of California Transportation Center.
    2. Song, Jiongjiong & Regan, Amelia C & Nandiraju, Srinivas, 2008. "A Bid Analysis Model with Business Constraints for Transportation Procurement Auctions," University of California Transportation Center, Working Papers qt5766c7r1, University of California Transportation Center.

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