Winner Determination with Sustainable-Flexible Considerations Under Demand Uncertainty in Transportation Service Procurement Auctions

Xiaohu Qian (), Mingqiang Yin (), Felix T. S. Chan () and Kai Yue ()
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Xiaohu Qian: Shenzhen University
Mingqiang Yin: Northeastern University
Felix T. S. Chan: Macau University of Science and Technology
Kai Yue: Shenzhen University

Networks and Spatial Economics, 2023, vol. 23, issue 4, No 6, 953-984

Abstract: Abstract Sustainability and flexibility are two main factors not being investigated explicitly by existing winner determination literature. From a fourth party logistics (4PL) provider’s point of view, an innovative sustainable-flexible winner determination problem under uncertain demand is particularly studied in transportation services procurement auctions. Based on a multi-attribute decision-making method, a linear constraint related to each bidder’s sustainability score and flexibility score can be constructed, and then we integrate an outside option policy to formulate a two-stage stochastic sustainable-flexible winner determination model. Subsequently, we develop an approximation approach to solve the model based on the principles of dual decomposition Lagrangian relaxation and the sample average approximation. Using an established generator to obtain random instances, the effectiveness and applicability of this research could be verified by conducting numerical experiments. Also, managerial insights can be obtained to provide decision support for running an efficient sustainable-flexible logistics system by using a Chinese 4PL firm’s real data.

Keywords: Winner determination; Approximation approach; Sustainability and flexibility; Uncertain demand; Transportation service procurement auction (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1007/s11067-023-09599-8

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