Location-based techniques for the synergy approximation in combinatorial transportation auctions

Abstract

The use of combinatorial auctions for the procurement of transportation services is investigated in this paper. We focus on the carrier viewpoint who is interested in submitting to the auction a selected bundle of loads that avoids some of the empty movement of the vehicles in his transportation network and that increases his profits. For this purpose we develop an optimization approach based on the use of the location techniques, usually used in the context of facility planning. Mathematically, this means maximizing the synergy among the bundle’s auctioned loads from one side and between the auctioned and the pre-existing loads from the other side. We show the validity of our approach by using first an illustrative example and then by applying it to solve a real-life problem related to a logistics company installed in the Arabic Gulf region.