Efficient Multi‐Attribute Multi‐Unit Auctions for B2B E‐Commerce Logistics

Abstract

This study is the first proposing allocatively efficient multi‐attribute auctions for the procurement of multiple items. In the B2B e‐commerce logistics problem (ELP), the e‐commerce platform is the shipper generating a large number of online orders between product sellers and buyers, and third‐party logistics (3PL) providers are carriers that can deliver these online orders. This study focuses on the ELP with multiple attributes (ELP‐MA), which is generally the problem of matching the shipper's online orders and 3PL providers given that price and other attributes are jointly evaluated. We develop a one‐sided Vickrey–Clarke–Groves (O‐VCG) auction for the ELP‐MA. The O‐VCG auction leads to incentive compatibility (on the sell side), allocative efficiency, budget balance, and individual rationality. We next introduce the concept of universally unsatisfied set to construct a primal‐dual algorithm, also called the primal‐dual Vickrey (PDV) auction. We prove that the O‐VCG auction can be viewed as a single‐attribute multi‐unit forward Vickrey (SA‐MFV) auction. Both PDV and SA‐MFV auctions realize VCG payments and truthful bidding for general valuations. This result reveals the underlying link not only between single‐attribute and multi‐attribute auctions, but between static and dynamic auctions in a multi‐attribute setting.

A Supply Chain Model with Blockchain-Enabled Reverse Auction Bidding Process for Transparency and Efficiency

“…Reverse Auction Bidding, RAB is a process in which a buyer of goods and services continues to solicit bids from sellers until the buyer is satisfied it has received an acceptably low price within the valid period. RAB is increasingly being used these days and has been reported to yield significant price reductions for buyer firms [29]. The problem of designing an efficient carrier auction model is always a challenge [13] as the rapid development of business has extended the supply chains to a new level.…”

“…), the carrier should pay attention to not only the price but also other non-price attributes like service quality, delivery-time etc. [29]. Zhang et al [13] has proposed a multi-attribute bidding for carrier procurement for the Yili Group Ltd., the largest dairy company in Asia.…”

Efficient multi-unit procurement mechanism with supply disruption risk

“…In this paper, we focus on efficient mechanism, which maximizes the total profit of the buyer and the supplier(s). A social efficient mechanism can help the buyer and its suppliers to achieve better cooperation and future development (Parkes and Kalagnanam, 2005;Xu and Huang, 2017). When the suppliers' costs associating to each level of success probability are known to all, the social efficient allocation is the solution of the following optimization problem:…”

“…Proposition 1 indicates that the dominate strategy for suppliers is to bid their information truthfully in the VCG-DR. Similar to Xu and Huang (2017) and Parkes and Kalagnanam (2005), we extended the incentive compatibility to multi-attribute case. Proposition 2 (Individual rationality, IR).…”

“…The proposition indicates that the VCG-DR is social efficient, i.e., maximizing the total profit of the buyer and supplier. Different from Parkes and Kalagnanam (2005) and Xu and Huang (2017), since the suppliers are not reliable, the buyer may get more or less than it order in the auction, which makes the problem more complicated and the results of these two works can not be applied to our problem.…”