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A Sampling-Based Stochastic Winner Determination Model for Truckload Service Procurement

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  • Bo Zhang
  • Hongwei Ding
  • Hongbo Li
  • Wei Wang
  • Tao Yao

Abstract

Many large shippers procure truckload (TL) service from carriers via a combinatorial auction. In order to determine the winners of the auction, they need to solve a combinatorial optimization problem known as winner determination problem (WDP). In practice, shippers must resolve the WDP under shipment volume uncertainty due to limited information of future demands. In this paper, we propose a sampling-based two-stage stochastic programming approach to solve WDP under shipment volume uncertainty. We propose a refined formulation of deterministic WDPs in which shortage in shipments and the associated penalty cost are explicitly modeled. We demonstrate that the refined model is more general and more feasible under uncertainty than the benchmarks. Theoretical results pertaining to problem feasibility are derived and their insights to TL service procurement are provided. We propose a sampling-based solution approach called Monte Carlo Approximation (MCA) and use numerical tests to show that MCA is numerically tractable for solving moderately sized instances of TL service procurement. Finally, we verify via Monte Carlo simulation that the solution to our proposed stochastic WDP yields lower procurement cost than the solution to the deterministic WDP. Copyright Springer Science+Business Media New York 2014

Suggested Citation

  • 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.
    • Handle: RePEc:kap:netspa:v:14:y:2014:i:2:p:159-181
    DOI: 10.1007/s11067-013-9214-6
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    References listed on IDEAS

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    Cited by:

    1. R. Jothi Basu & Nachiappan Subramanian & Angappa Gunasekaran & P. L. K. Palaniappan, 2017. "Influence of non-price and environmental sustainability factors on truckload procurement process," Annals of Operations Research, Springer, vol. 250(2), pages 363-388, March.
    2. 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.
    3. 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).
    4. 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).
    5. Xiaohu Qian & Mingqiang Yin & Felix T. S. Chan & Kai Yue, 2023. "Winner Determination with Sustainable-Flexible Considerations Under Demand Uncertainty in Transportation Service Procurement Auctions," Networks and Spatial Economics, Springer, vol. 23(4), pages 953-984, December.
    6. 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.
    7. 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.
    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. 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.
    10. 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.

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