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Coordination Is Hard: Electronic Auction Mechanisms for Increased Efficiency in Transportation Logistics

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  • Paul Karaenke

    (Department of Informatics, Technical University of Munich, 85748 Garching, Germany)

  • Martin Bichler

    (Department of Informatics, Technical University of Munich, 85748 Garching, Germany)

  • Stefan Minner

    (School of Management, Technical University of Munich, 80333 Munich, Germany)

Abstract

The lack of coordination among carriers leads to substantial inefficiencies in logistics. Such coordination problems constitute fundamental problems in supply chain management for their computational and strategic complexity. We consider the problem of slot booking by independent carriers at several warehouses and investigate recent developments in the design of electronic market mechanisms promising to address both types of complexity. Relax-and-round mechanisms describe a class of approximation mechanisms that is truthful in expectation and runs in polynomial time. Whereas the solution quality of these mechanisms is low, we introduce a variant able to solve real-world problem sizes with high solution quality while still being incentive compatible. We compare these mechanisms to core-selecting auctions, which are not incentive compatible but provide stable outcomes with respect to the bids. In addition to a theoretical analysis we report results from extensive numerical experiments based on field data. The experimental results yield a clear ranking of the mechanisms in terms of waiting time reductions and computation times.

Suggested Citation

  • Paul Karaenke & Martin Bichler & Stefan Minner, 2019. "Coordination Is Hard: Electronic Auction Mechanisms for Increased Efficiency in Transportation Logistics," Management Science, INFORMS, vol. 65(12), pages 5884-5900, December.
    • Handle: RePEc:inm:ormnsc:v:65:y:2019:i:12:p:5884-5900
    DOI: 10.1287/mnsc.2018.3208
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    1. Guo, Chaojie & Thompson, Russell G. & Foliente, Greg & Kong, Xiang T.R., 2021. "An auction-enabled collaborative routing mechanism for omnichannel on-demand logistics through transshipment," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 146(C).
    2. Karaenke, Paul & Bichler, Martin & Merting, Soeren & Minner, Stefan, 2020. "Non-monetary coordination mechanisms for time slot allocation in warehouse delivery," European Journal of Operational Research, Elsevier, vol. 286(3), pages 897-907.
    3. Abhishek Ray & Mario Ventresca & Karthik Kannan, 2021. "A Graph-Based Ant Algorithm for the Winner Determination Problem in Combinatorial Auctions," Information Systems Research, INFORMS, vol. 32(4), pages 1099-1114, December.
    4. Pilz, Danny & Schwerdfeger, Stefan & Boysen, Nils, 2022. "Make or break: Coordinated assignment of parking space for breaks and rest periods in long-haul trucking," Transportation Research Part B: Methodological, Elsevier, vol. 164(C), pages 45-64.
    5. Xiao Hu & Kaifang Fu & Zhixiang Chen & Zhijiao Du, 2022. "Decision-Making of Transnational Supply Chain Considering Tariff and Third-Party Logistics Service," Mathematics, MDPI, vol. 10(5), pages 1-20, February.
    6. Wolfgang Ketter & Karsten Schroer & Konstantina Valogianni, 2023. "Information Systems Research for Smart Sustainable Mobility: A Framework and Call for Action," Information Systems Research, INFORMS, vol. 34(3), pages 1045-1065, September.
    7. Chen, Yan & Huang, Zhenhua & Ai, Hongshan & Guo, Xingkun & Luo, Fan, 2021. "The Impact of GIS/GPS Network Information Systems on the Logistics Distribution Cost of Tobacco Enterprises," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 149(C).
    8. Kong, Xiang T.R. & Kang, Kai & Zhong, Ray Y. & Luo, Hao & Xu, Su Xiu, 2021. "Cyber physical system-enabled on-demand logistics trading," International Journal of Production Economics, Elsevier, vol. 233(C).
    9. Martin Bichler & Soeren Merting, 2021. "Randomized Scheduling Mechanisms: Assigning Course Seats in a Fair and Efficient Way," Production and Operations Management, Production and Operations Management Society, vol. 30(10), pages 3540-3559, October.
    10. Arroyo, Federico, 2024. "Cost Allocation in Vehicle Routing Problems with Time Windows," Junior Management Science (JUMS), Junior Management Science e. V., vol. 9(1), pages 1241-1268.
    11. Pal Singh, Satender & Adhikari, Arnab & Majumdar, Adrija & Bisi, Arnab, 2022. "Does service quality influence operational and financial performance of third party logistics service providers? A mixed multi criteria decision making -text mining-based investigation," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 157(C).
    12. Margaretha Gansterer & Richard F. Hartl, 2020. "Shared resources in collaborative vehicle routing," TOP: An Official Journal of the Spanish Society of Statistics and Operations Research, Springer;Sociedad de Estadística e Investigación Operativa, vol. 28(1), pages 1-20, April.

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