Carrier assignment models in transportation procurement

Abstract

This paper extends carrier assignment models used in winner determination auctions for transportation procurement to include shipper non-price objectives and carrier transit point costs. The models are unlike traditional carrier assignment models which incorporate only carrier lane bids, and different from combinatorial auction models which focus on packets of lanes without considering transit point costs. We develop solutions, including metaheuristics, for the new models and through computational experimentation show that the algorithms work well and can be easily implemented.

A strategic approach to improve sustainability in transportation service procurement

“…Few studies have discussed the importance of restricting the number of lanes allocated to a particular carrier (Sheffi, 2004;Guo et al, 2006). This restriction ensures better spread and the participation of a huge number of carriers with more choices available for shippers.…”

“…Sheffi (2004) proposed to include various non-price objectives while solving carrier assignment problem involved in truckload transportation service procurement. Guo et al (2006) solved winner determination auctions for transportation procurement to include shipper non-price objectives and carrier transit point costs. A model was developed by considering transit point costs and metaheuristic methods were proposed for the new model.…”

“…In some cases, unit demand is considered for simplification (Guo et al, 2006;Lee et al, 2007;Song and Regan, 2003). Therefore, the total transportation cost is calculated by assuming a single load in each lane.…”

“…The model is based on the formulation developed by Guo et al (2006) which is a network flow model with the assumption of unit demand in each lane. In this study, the model has been extended to accommodate practical issues, where demand in each lane is an estimated value and lane distance is given in RTKM (Round Trip distance in Kilometer).…”

“…Cost savings and sustainability related benefits are achieved through adoption of combinatorial bidding hence it is considered in this study. In formulating the carrier assignment model, demands for each lane are taken from the estimated data available in the call-forbidding offered by the shipper, but it is assumed as unity in most of the literature (Song and Regan, 2003;Sheffi, 2004;Guo et al, 2006). In the real world transportation service procurement process, load to be moved in each lane is not unity and it varies across different lanes.…”