The First Use of a Combined-Value Auction for Transportation Services

Abstract

Combined-value auctions (CVAs) allow participants to make an offer of a single amount for a collection of items. These auctions provide value to both buyers and sellers of goods or services in a number of environments, but they have rarely been implemented, perhaps because of lack of knowledge and experience. Sears Logistics Services (SLS) is the first procurer of trucking services to use a CVA to reduce its costs. In 1993, it saved 13 percent over past procurement practices. Experimental economics played a crucial role in the development, sale, and use of the CVA.

Theory, experiment and the federal communications commission spectrum auctions

“…Subsequently, the idea of smart computer-assisted markets was applied in a proposal to deregulate the electric power industry in Arizona by separating the "wires business" from energy sales, and create a smart market in the form of the Arizona Energy Exchange, (Rassenti and Smith, 1986); in a Federal Energy Regulatory Commission study of the application of linear programming algorithms to the processing of node-specific bids to buy delivered gas and offers to sell wellhead gas, and leg-specific offers of pipeline capacity by multiple rights holders (McCabe, Rassenti and Smith, 1989); in an auction for payloads to be manifested on the Space Shuttle (Banks, Ledyard and Porter 1989); in a barter system for resources on the Cassini mission to Saturn (Ledyard, Porter and Rangel 1994); in an auction to schedule trains (Brewer and Plott 1996); in an auction for transportation services (Ledyard, Olson, Porter, Swanson and Torma (2000); in a two-sided combinatorial auction for trading pollution permits (Isikida, Ledyard, Olson and Porter, 2000); in a market to exchange financial portfolios (Bossarts, Fine and Ledyard 2000).…”

GRASP with Hybrid Path Relinking for Bi-Objective Winner Determination in Combinatorial Transportation Auctions

“…This problem, described in the literature as the Winner Determination Problem (WDP), is an NP-hard, combinatorial optimization problem (Sandholm, Suri, Gilpin, and Levine 2002). In the literature there is as yet only a fairly limited number of papers that address a WDP in the context of the procurement of transport services (Cantillon and Pesendorfer 2006;Sheffi 2006, 2003;Elmaghraby and Keskinocak 2004;Ledyard, Olson, Porter, Swanson, and Torma 2002;Song and Regan 2003;Buer and Pankratz 2010). Nevertheless, in the recent past combinatorial auctions have already been applied in shipping with success.…”

Planning Problems in Public Transit

“…There are by now successful applications of this methodology in the tendering of transportation contracts in logistics [23] and firms have emerged which market the corresponding auctioning platforms (combine.net). In public transport, however, such methods have not been applied yet.…”