A combinatorial auction improves school meals in Chile: a case of OR in developing countries

Abstract

The Chilean State delivers essential meal services at schools for low-income students. Junta Nacional de Auxilio Escolar y Becas, the institution in charge of covering 1,300,000 children, leases the meal service to private enterprises. We developed an integer linear programming model to assign the meal contracts, in a process known as combinatorial auctions. The resulting model, which is NP-hard, led to significant improvements in efficiency and also contributed to making the process more transparent. The results are apparent in substantial improvements in quality and coverage of the service, and important savings to the country, which are equivalent to feeding 300,000 children in addition. We developed techniques to solve the combinatorial models and also to analyze and compare multiple scenarios to find robust solutions. For the objective function of this problem, we analyzed several options to consider different kinds of social benefits. In this paper, we describe the problem, the methodology and the results. We also present empirical results based on 6 years of experience. Finally, we discuss the relevance and impact of using operations research in these central issues in developing countries.

Combinatorial auctions for electronic business

“…In this paper, we have seen three real-world applications: FCC spectrum auctions (Section 5); logistics services procurement by Home Depot (Section 6); and direct materials procurement by MARS (Section 7). Several other applications have also been reported: airspace resource allocation [44]; planning and allocation of truckloads in transportation [34]; allocation of bus routes [42]; transportation services for Sears logistics [31] conducted by Net Exchange (ã ã h ã 0 ä 4 å ® ae P ç 0 ä ¬ è y é § ê ); school meals planning [45], etc. Corporate procurement appears to be a major application area for combinatorial auctions.…”

“…A recent esoteric application is that of using combinatorial auctions in improving school meals [45]. Other interesting applications are in B2B negotiations [46,47,36] and in planning of travel packages [48].…”

Quantitative Methods for a New Configuration of Territorial Units in a Chilean Government Agency Tender Process

“…The system based on this method (Epstein et al 2002) generated cost-reduction and quality-improvement benefits of 22 percent of the tender's total value. In 2002, it was awarded the IFORS Prize for OR in Development as the best application in a developing country in terms of its social impact (Epstein et al 2004).…”

“…It incorporates the government's criteria regarding costs and quality (Epstein et al 2002), subject to various economic, technical, and operational constraints. Each year, a third of the TUs are contracted for a three-year period, ensuring that suppliers can recoup their investments in a reasonable period.…”

A Mathematical Programming Approach to Applicant Selection for a Degree Program Based on Affirmative Action

“…Most of these cases involve the use of the Analytic Hierarchy Process [5]. Some of the ideas to be employed in the present study are taken from [2].…”