An efficient bidding heuristic for simultaneous truckload transportation auctions
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An efficient bidding heuristic for simultaneous truckload transportation auctions Evren Olcaytu1
· Gültekin Kuyzu2
Received: 19 May 2019 / Accepted: 4 June 2020 © Springer-Verlag GmbH Germany, part of Springer Nature 2020
Abstract Transportation auctions are increasingly made online and the bidding time intervals are becoming much shorter. From the carriers’ perspective, bid determination problems need to be solved more quickly due to the increasing number of auctions in the online transportation marketplace for their survivability. In this research, we study the bid price determination problem of truckload (TL) carriers participating in multiple independent first-price sealed-bid single-request TL transportation auctions simultaneously. The carriers must win the right combination of auctions to ensure profitability. The high level of competition, the uncertainty of the outcomes of the auctions, and the independence of the auctions from each other constitute the main challenge in this setting. In order to solve this problem, we develop an efficient heuristic which identifies the auctions to participate and determines the carriers’ bids in the selected auctions. We demonstrate the efficiency and the effectiveness of our proposed heuristic by simulating a competitive auction-based transportation procurement marketplace under various parameter settings. The simulations show that our proposed heuristic performs close to an existing approach found in the literature with much less computational effort. Keywords Bidding · Transportation procurement auctions · Truckload transportation
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Evren Olcaytu [email protected] Gültekin Kuyzu [email protected]
1
Department of Industrial Engineering, TOBB University of Economics and Technology, Ankara, Turkey
2
MIT-Zaragoza International Logistics Program, Zaragoza Logistics Center, Zaragoza, Spain
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E. Olcaytu, G. Kuyzu
1 Introduction Transportation spot markets have become popular platforms where shippers and carriers meet and sign short-term transportation contracts in a quick and cost-efficient manner. In these spot markets, shippers list their shipment requests, and carriers submit quotes on the requests they are interested in. This process is effectively a reverse auction mechanism [7], where the carrier quotes are essentially bids on the shipment requests. Spot procurement auctions pose significant challenges for the participating carriers, who must make decisions intelligently to prosper in this dynamic and competitive environment. Selecting the requests to bid on, and determining the bid prices are two of the most important challenges for the carriers in such auctions. A carrier’s bid on a request should be low enough to win but high enough for the carrier to be profitable. The carrier may submit a very high bid if the request is not very attractive. A carrier that actively pursues customers in spot procurement markets is likely to participate in multiple auctions simultaneously. If the carrier is not careful, it may end up with a set of requests which do no
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