Approximation algorithms for the bid construction problem in combinatorial auctions for the procurement of freight transportation contracts |
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Authors: | Jiongjiong Song Amelia Regan |
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Institution: | aInstitute of Transportation Studies, University of California, Irvine 92697, United States;bDepartment of Computer Science, Department of Civil and Environmental Engineering, University of California, Irvine, United States |
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Abstract: | Trucking companies (carriers) are increasingly facing combinatorial auctions conducted by shippers seeking contracts for their transportation needs. The bid valuation and construction problem for carriers facing these combinatorial auctions is very difficult and involves the computation of a number of NP-hard sub problems. In this paper we examine computationally tractable approximation methods for estimating these values and constructing bids. The benefit of our approximation method is that it provides a way for carriers to discover their true costs and construct optimal or near optimal bids by solving a single NP-hard problem. This represents a significant improvement in computational efficiency. We examine our method both analytically and empirically using a simulation based analysis. |
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Keywords: | Combinatorial auctions Contract procurement Set covering Trucking operations |
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