Efficient Auction Mechanisms for Supply Chain Procurement

Chen, Rachel R.; Roundy, R.; Zhang, Rachel Q.; Janakiraman, Ganesh

doi:10.1287/mnsc.1040.0329

Cited by 90 publications

(52 citation statements)

References 21 publications

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“…Although some attention was given to auctions or procurement in such domains, (for example for forming supply chains [5] or procurement tasks [26]), previous work gave little attention to coalitional aspects. One exception is [60], which studies stability in supply chains, but focuses on pair coalitions and situations without side payments.…”

Section: Related Work and Conclusionmentioning

confidence: 99%

Proof Systems and Transformation Games

Bachrach

Zuckerman

Wooldridge

et al. 2010

Mathematical Foundations of Computer Science 2010

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We introduce Transformation Games (TGs), a form of coalitional game in which players are endowed with sets of initial resources, and have capabilities allowing them to derive certain output resources, given certain input resources. The aim of a TG is to generate a particular target resource; players achieve this by forming a coalition capable of performing a sequence of transformations from a combined set of initial resources to the target resource. TGs can model a number of natural settings, such as cooperative proof systems, where a collection of agents having different expertise work together to derive a proof for a target theorem, or supply chains, where agents cooperate to create a target product from base resources. After presenting the TG model, and discussing its interpretation, we consider possible restrictions on the transformation chain, resulting in different coalitional games. Following the basic model, we consider the computational complexity of several problems in TGs, such as testing whether a coalition wins, checking if a player is a dummy or a veto player, computing the core of the game, computing power indices, and checking the effects of possible restrictions on the coalition. Finally, we consider extensions to the model in which transformations have associated costs. This is an extended version of a conference paper with the same title [21], which was presented at the 35th International Symposium on Mathematical Foundations of Computer Science (MFCS 2010), in Brno, Czech Republic. This new version contains additional results regarding computing the Shapley value in Transformation Games as well as additional results on Transformation Games with a bounded number of resources and transformations. We have also expanded our examination of how the Transformation Game model can capture multiagent interactions in both supply chains and proof systems, and included revised and extended proofs.

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Section: Related Work and Conclusionmentioning

confidence: 99%

Proof Systems and Transformation Games

Bachrach

Zuckerman

Wooldridge

et al. 2010

Mathematical Foundations of Computer Science 2010

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“…One substantial and well-documented use of computational mechanisms falls under the general heading of -ecommerce.‖ For example, it has been reported that over 98% of Google's $6.14 billion in revenue (as of 2006) is achieved through the use of an explicitly designed auction mechanism for allocating advertising space on web pages returned from keyword searches [Edelman 2007]. Another substantial application area in electronic commerce is in supply chain optimization [Staib 2001, Chen 2005, Sandholm 2006]. …”

Section: Computational Mechanism Designmentioning

confidence: 99%

Results of SEI Independent Research and Development Projects

Niz¹,

Eagles²,

Feiler³

et al. 2008

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“…A first step in incorporating these other cost components while making a strategic sourcing decision is taken by Chen, Janakiraman, Roundy, and Zhang [59]. They provide the design of single item, multi-unit auction mechanisms that achieve overall supply chain efficiency while taking into account production and transportation costs.…”

Section: Single Item Multi-unit Procurement To Minimize Total Cosmentioning

confidence: 99%

“…Chen, Janakiraman, Roundy, and Zhang [59] present three separate auction mechanisms -Auction T, Auction R, and Auction S. The first two mechanisms incorporate transportation costs explicitly whereas in the third model, only production costs are considered for the allocation decision and transportation decisions are made subsequently. This provides a means to compare the two approaches and the implications for total cost of procurement strategies.…”

Section: Single Item Multi-unit Procurement To Minimize Total Cosmentioning

confidence: 99%

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Auction-Based Mechanisms for Electronic Procurement

Chandrashekar

Narahari

Rosa

et al. 2007

IEEE Trans. Automat. Sci. Eng.

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Abstract-This article reviews recent research and current art in the area of auction based mechanisms for electronic procurement. These mechanisms are becoming increasingly relevant in modern day e-procurement systems since they enable a promising way of automating negotiations with suppliers and achieving the ideal goals of procurement efficiency, cost minimization, and agent based deployment. The survey delineates different representative scenarios in e-procurement where auctions can be deployed and describes the conceptual and mathematical aspects of different categories of procurement auctions. We discuss three categories: (1) multi-unit auctions for a single homogeneous type of item; (2) combinatorial procurement auctions where the buyer seeks to procure a bundle of multiple items and the suppliers bid for subsets of the bundle; and (3) multi-attribute auctions where the procurement decisions transcend cost considerations alone, to take into account lead times, logistics costs, and other important attributes. In all three cases, the winner determination problem and the determination of payments turn out to be interesting and challenging combinatorial optimization problems. In our review, we present mathematical formulation of procurement scenarios under each category, bring out the challenge involved in solving the problems, and indicate active research topics. We also present a case study of electronic procurement at General Motors.A Note to Practitioners-Since the burst of the dot.com bubble, many procurement professionals and purchasing managers have begun to question the ability of the Internet to redefine procurement processes within their firms. In this article we set out to show that this would be a misplaced sense of deja vu because the Internet along with a milieu of decision technologies based on Game Theory and Optimization is proving to be a significant tool in the hands of procurement professionals. Sans all the hype, the dot.com phenomena has left behind useful ideas including that of e-platforms for on-line auctions. Building upon this core conceptual construct, familiar to most procurement professionals, we first illustrate the successful implementation of sophisticated auction models by pioneering firms, based on optimization technologies, that meet the requirements of complex business-to-business procurement. We then discuss the exciting field of research this has opened up with a vast potential for immediate and gainful applications. We review the existing stateof-the-art in this field, track its recent developments and classify the models available for different procurement scenarios. We also provide pointers to areas that require further fundamental as well as applied research which calls for the attention of not just academic researchers but also practicing professionals.

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Efficient Auction Mechanisms for Supply Chain Procurement

Cited by 90 publications

References 21 publications

Proof Systems and Transformation Games

Proof Systems and Transformation Games

Results of SEI Independent Research and Development Projects

Auction-Based Mechanisms for Electronic Procurement

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