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A stochastic programming winner determination model for truckload procurement under shipment uncertainty

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  • Ma, Zhong
  • Kwon, Roy H.
  • Lee, Chi-Guhn

Abstract

We propose a two-stage stochastic integer programming model for the winner determination problem (WDP) in combinatorial auctions to hedge the shipper's risk under shipment uncertainty. The shipper allows bids on combinations of lanes and solves the WDP to determine which carriers are to be awarded lanes. In addition, many other important comprehensive business side constraints are included in the model. We demonstrate the value of the stochastic solution over one obtained by a deterministic model based on using average shipment volumes. Computational results are given that indicate that moderately sized realistic instances can be solved by commercial branch and bound solvers in reasonable time.

Suggested Citation

  • Ma, Zhong & Kwon, Roy H. & Lee, Chi-Guhn, 2010. "A stochastic programming winner determination model for truckload procurement under shipment uncertainty," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 46(1), pages 49-60, January.
    • Handle: RePEc:eee:transe:v:46:y:2010:i:1:p:49-60
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    Citations

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    Cited by:

    1. Xu, Su Xiu & Huang, George Q., 2014. "Efficient auctions for distributed transportation procurement," Transportation Research Part B: Methodological, Elsevier, vol. 65(C), pages 47-64.
    2. Feki, Yassin & Hajji, Adnène & Rekik, Monia, 2016. "A hedging policy for carriers’ selection under availability and demand uncertainty," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 85(C), pages 149-165.
    3. 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.
    4. Bo Zhang & Hongwei Ding & Hongbo Li & Wei Wang & Tao Yao, 2014. "A Sampling-Based Stochastic Winner Determination Model for Truckload Service Procurement," Networks and Spatial Economics, Springer, vol. 14(2), pages 159-181, June.
    5. Su Xiu Xu & George Q. Huang & Meng Cheng, 2017. "Truthful, Budget-Balanced Bundle Double Auctions for Carrier Collaboration," Transportation Science, INFORMS, vol. 51(4), pages 1365-1386, November.
    6. Hammami, Farouk & Rekik, Monia & Coelho, Leandro C., 2021. "Exact and hybrid heuristic methods to solve the combinatorial bid construction problem with stochastic prices in truckload transportation services procurement auctions," Transportation Research Part B: Methodological, Elsevier, vol. 149(C), pages 204-229.
    7. Aghdas Badiee & Hamed Kalantari & Chefi Triki, 2023. "Leader-based diffusion optimization model in transportation service procurement under heterogeneous drivers’ collaboration networks," Annals of Operations Research, Springer, vol. 322(1), pages 345-383, March.
    8. Izdebski, Mariusz & Jacyna-Gołda, Ilona & Gołda, Paweł, 2022. "Minimisation of the probability of serious road accidents in the transport of dangerous goods," Reliability Engineering and System Safety, Elsevier, vol. 217(C).
    9. Jothi Basu, R. & Bai, Ruibin & Palaniappan, PL.K., 2015. "A strategic approach to improve sustainability in transportation service procurement," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 74(C), pages 152-168.
    10. Xu, Su Xiu & Cheng, Meng & Huang, George Q., 2015. "Efficient intermodal transportation auctions for B2B e-commerce logistics with transaction costs," Transportation Research Part B: Methodological, Elsevier, vol. 80(C), pages 322-337.
    11. Lafkihi, Mariam & Pan, Shenle & Ballot, Eric, 2019. "Freight transportation service procurement: A literature review and future research opportunities in omnichannel E-commerce," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 125(C), pages 348-365.
    12. Rancourt, Marie-Ève & Bellavance, François & Goentzel, Jarrod, 2014. "Market analysis and transportation procurement for food aid in Ethiopia," Socio-Economic Planning Sciences, Elsevier, vol. 48(3), pages 198-219.
    13. Zhang, Bo & Yao, Tao & Friesz, Terry L. & Sun, Yuqi, 2015. "A tractable two-stage robust winner determination model for truckload service procurement via combinatorial auctions," Transportation Research Part B: Methodological, Elsevier, vol. 78(C), pages 16-31.
    14. 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.
    15. Yang, Fang & Huang, Yao-Huei, 2020. "Linearization technique with superior expressions for centralized planning problem with discount policy," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 542(C).
    16. Yang, Fang & Huang, Yao-Huei & Li, Jun, 2019. "Alternative solution algorithm for winner determination problem with quantity discount of transportation service procurement," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 535(C).
    17. 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.
    18. 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.
    19. Sun, Jiasen & Li, Guo & Xu, Su Xiu & Dai, Wei, 2019. "Intermodal transportation service procurement with transaction costs under belt and road initiative," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 127(C), pages 31-48.
    20. Remli, Nabila & Amrouss, Amine & El Hallaoui, Issmail & Rekik, Monia, 2019. "A robust optimization approach for the winner determination problem with uncertainty on shipment volumes and carriers’ capacity," Transportation Research Part B: Methodological, Elsevier, vol. 123(C), pages 127-148.
    21. Mesa-Arango, Rodrigo & Ukkusuri, Satish V., 2015. "Demand clustering in freight logistics networks," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 81(C), pages 36-51.

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