A Two-Stage Auction Mechanism for 3PL Supplier Selection under Risk Aversion

Fuqiang Lu, Hualing Bi, Wenjing Feng, Yanli Hu, Suxin Wang and Xu Zhang
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Fuqiang Lu: School of Economics and Management, Yanshan University, Qinhuangdao 066004, China
Hualing Bi: School of Economics and Management, Yanshan University, Qinhuangdao 066004, China
Wenjing Feng: Faculty of Information Science and Engineering, Northeastern University, Shenyang 810819, China
Yanli Hu: Faculty of Information Science and Engineering, Northeastern University, Shenyang 810819, China
Suxin Wang: Faculty of Information Science and Engineering, Northeastern University, Shenyang 810819, China
Xu Zhang: School of Economics and Management, Yanshan University, Qinhuangdao 066004, China

Sustainability, 2021, vol. 13, issue 17, 1-17

Abstract: The third party logistics (3PL) suppliers selection is a key issue in sustainable operation of fourth party logistics (4PL). A two-stage auction mechanism is designed for the selection of 3PL suppliers. Different from previous studies, the paper considers risk preference of 4PL integrators during the auction and uses the prospect theory to establish the auction scoring function of 4PL integrators. First, a first score sealed auction (FSSA) mechanism is used to solve the selection problem. However, the results show that FSSA is not an ideal method. Hence, the English auction (EA) mechanism is combined with the FSSA mechanism to form a two-stage auction. The FSSA is taken as the first stage auction, and the EA is taken as the second stage auction, and the two-stage auction mechanism is constructed. The two-stage auction can improve the utility of the 4PL integrator and the auction efficiency. In addition, for the degree of disclosure of attribute weights in the scoring function, two states, complete information and incomplete information is designed. In case analysis, the validity of the designed two-stage auction mechanism is verified. The 4PL integrator can obtain higher utility under the risk-neutral auction than the risk-averse auction. The complete information auction does not make the 4PL integrator obtain higher utility than the incomplete information auction.

Keywords: sustainable operation; supplier selection; two-stage auction; risk aversion; information disclosure (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2021
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