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Bidding Strategies for Carrier in Combinatorial Transportation Auction

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Author(s): Pittawat Ueasangkomsate | Asst. Prof. Dr. Manoj Lohatepanont

Journal: International Journal of Business Research and Management
ISSN 2180-2165

Volume: 3;
Issue: 1;
Start page: 1;
Date: 2012;
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Keywords: A Bid-to-Cost Ratio | Bid Price | Combinatorial Auction | Transportation Procurement | Bidding Strategies | Optimization Problem.

ABSTRACT
In combinatorial auction for truckload transportation service procurement, we introduce thebidding strategy for carrier facing the hard valuation problem to all possible routes. The modeluses a bid-to-cost ratio of carriers surveyed in Thailand to represent the bidding behavior incombinatorial freight procurement. This model facilitates carrier to value the bid price forinterested packages that involve with pattern of transportation service under different competitiveenvironment. The results of analysis with hypotheses in regression model reveal significantly thata pattern of transportation service, a number of competitors, and a pre-empty backhaul to newlane distance ratio with number of competitors do impact negatively on a bid-to-cost ratio ofcarrier, whereas a pre-empty backhaul to new lane distance ratio does impact positively on a bidto-cost ratio of carrier in combinatorial transportation auction. To find optimal bid price forinterested packages in the incomplete information game, the empirical study in stochasticoptimization problem with Monte Carlo method can provide the best solution for carrier in order toacquire the maximum expected profit in the auction. The results present that the expected profitwith optimal solution of bidder is more than the average benefit in the competition marketobviously. While in turn the results also show that shipper could potentially reduce the cost oftransportation service procurement regarding our solution algorithm considerably.
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