COMBINATORIAL AUCTIONS IN THE PROCUREMENT OF TRANSPORTATION SERVICES

Abstract

Procuring transportation services is one of the most significant costs in the logistics industry. The Combinatorial Auction (CA) is a frequently used procurement mechanism because it handles the market's competitiveness and optimizes resources. The complexity of transportation modes and the versatility of the supply chain make the CA more relevant. The thesis explores the CA mechanism tailored for customers positioned at transportation network intersections. Bid Generation Problem (BGP) and Winner Determination Problem (WDP) are the main issues in CA. This thesis discusses the BGP to find an efficient solution method and considers the discount mechanism to stimulate the synergy of the transportation network. Novel algorithms are introduced to quantify the synergy and deal with the synergy-based BGP of high dimensionality. Results show that the proposed method can efficiently determine the exact solutions for 800 new contracts with a computational time of less than a second. Moreover, it examines the WDP, where the winner's emissions reduction efforts have been counted to handle the operations under carbon tax regulation. Also, the effect of discounts on any potential early shipment has been investigated. Results show that discounts are pivotal in decreasing transportation expenses by 2% savings for the shipper and 13% for the carriers (depending on the problem and inputs) in shipping expenses, with a 24% reduction in empty trips on average. This thesis also discusses sustainability aspects, as the transportation sector is one of the most significant contributors to carbon emissions in supply chain management (SCM). We address this issue by ensuring a reduction in empty movements; this can boost ecological and cost efficiencies within SCM.

Date of Award	2024
Original language	American English
Awarding Institution	HBKU College of Science and Engineering