An efficient multi-attribute multi-item auction mechanism with ex-ante and ex-post satisfaction for 4PL transportation service procurement

Abstract

Reverse auction is an effective tool for a 4PL to purchase transportation services. This paper investigated a new transportation services procurement problem for 4PL, which involves three features: the 4PL’s loss-averse behavior, price and non-price attributes, and multiple transportation requests. An efficient multi-attribute multi-item reverse auction mechanism considering the 4PL ex-ante and ex-post satisfaction (EES-MMRA) is proposed to purchase transportation services for the 4PL. In the EES-MMRA, integrating the allocation rule with the 4PL ex-ante satisfaction, a 0-1 programming model is constructed to determine winning 3PLs and obtain efficient allocations. Then, a payment rule considering the 4PL ex-post satisfaction is established to ensure truthful bidding of 3PLs. And we discuss some desirable properties (e.g., incentive compatibility, individual rationality, efficiency, and budget balance properties) to justify the EES-MMRA mechanism, subsequently. Next, several numerical experiments are conducted to demonstrate the effectiveness and applicability of the EES-MMRA mechanism. Furthermore, sensitivity analysis presents the influences of the weights of the non-price attributes, risk attitude coefficients, and loss aversion coefficients. Finally, we conduct comparison analysis to show the advantages of the EES-MMRA mechanism over the known Vickrey–Clark–Groves (P-VCG) mechanism.