Optimizing Trade in Electronic Transportation Marketplaces by Using Combinatorial Double Auction Approach

Authors

1 Associate Professor, Department of Engineering, Tarbiat Modares University, Tehran, Iran

2 Professor, Department of Engineering, Tarbiat Modares University, Tehran, Iran

3 Ph.D. Candidate, Department of Engineering, Tarbiat Modares University, Tehran, Iran

Abstract

Electronic transportation marketplaces (ETMs) are Internet-based mechanisms that match buyers and sellers of transportation services. With claims of reducing the administrative costs of transportation procurement to virtually nothing, the allure of ETMs is considerable. Shippers (transportation buyers) must therefore determine whether to pursue the new-founded opportunity and buy transportation services through an Internet-based intermediary. To date, combinatorial auctions are increasingly used by large shippers as a method to establish service contracts with trucking companies. In order to achieve maximal benefits in these auctions, carriers must determine a bidding policy that can accurately evaluate the costs they will incur to fulfill these contracts and which can quickly examine many different possible options.In this paper a combinatorial double auction model to improve efficiency of trade in transportation electronic marketplace is presented. In this model both buyer (shipper) and seller (carriers) could bid combination of lane in the transportation electronic marketplace.First a framework is developed to show how combinatorial auctions are being used for the procurement of freight transportation services. Then the alternative solution is recommended, including a mathematical model. Also the result of mathematical model is analyzed and it is shown that in continuous mathematical model optimal solution is better than integer model in two aspects: marketplace benefits and time to solve the model.

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