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Sustainability and flexibility are two main factors not being investigated explicitly by existing winner determination literature. From a fourth party logistics (4PL) provider's point of view, an innovative sustainable-flexible winner determination problem under uncertain demand is particularly studied in transportation services procurement auctions. Based on a multi-attribute decision-making method, a linear constraint related to each bidder's sustainability score and flexibility score can be constructed, and then we integrate an outside option policy to formulate a two-stage stochastic sustainable-flexible winner determination model. Subsequently, we develop an approximation approach to solve the model based on the principles of dual decomposition Lagrangian relaxation and the sample average approximation. Using an established generator to obtain random instances, the effectiveness and applicability of this research could be verified by conducting numerical experiments. Also, managerial insights can be obtained to provide decision support for running an efficient sustainable-flexible logistics system by using a Chinese 4PL firm's real data. [ABSTRACT FROM AUTHOR]

Quantity discount is a frequently adopted scheme that has not been explicitly investigated in logistics service procurement auctions. This paper focuses on a revised winner determination problem under quantity discounts and demand uncertainty for a fourth-party logistics (4PL) provider in a combinatorial reverse auction. To characterize our research problem, a two-stage stochastic nonlinear programming model is constructed. Inspired by the idea of sample average approximation (SAA), the nonlinear model is reformulated as a deterministic mixed integer linear programming model by using a linearization technique with superior expressions. Since the reformulation has a large number of decision variables and constraints, we integrate SAA with a dual decomposition Lagrangian relaxation technique (DDLR) to develop a solution method called SAA-DDLR. Numerical experiments are conducted to illustrate the effectiveness and applicability of our model and method. Sensitivity analysis reveals that both the 4PL and 3PLs can benefit from the quantity discount scheme. Managerial insights are drawn for the 4PL to run a cost-effective logistics system in the presence of quantity discounts. [ABSTRACT FROM AUTHOR]

This paper considers decisions of bidders with bounded rationality in different thinking levels for a first-price sealed-bid reverse auction. To characterize the nonequilibrium strategic thinking, we construct a mathematical model that incorporates the "level-k decision rule" to iteratively derive closed-form solutions. Then the effects of bidders' heterogeneous beliefs of thinking levels on their bid prices and expected payoffs are investigated. We find that under some assumptions, bidders will exhibit oscillating behavior in their bid prices and expected profits in terms of thinking levels. When the thinking level tends to infinity, the bid prices and expected profits converge to those in the conventional analysis with perfectly rational bidders. An interesting finding from theoretical analysis verified by numerical experiments is that any bidder with a thinking level above two should bid according to level-2 bidder's strategy to achieve the highest expected profit, and in this case the buyer will pay no more than level-2 bidder's bid price. [ABSTRACT FROM AUTHOR]

Clean energy is an important source to mitigate the pressure of resources shortage and environmental effects. While multiattribute reverse auction is frequently adopted for the procurement efficiency of clean energy devices, the associated winner determination problem is explicitly studied for a utility company/buyer to select the most appropriate supplier in the clean energy market. Considering the buyer's loss-averse behavior with incomplete information and suppliers' conflicting attributes in different types evaluated by multiple experts, we incorporate an I U L O W A f (induced uncertain linguistic ordered weighted averaging) operator and a revised TODIM (an acronym in Portuguese of Interactive and Multi-attribute Decision Making) measure that is consistent with prospect theory into the "benefits, opportunities, costs and risks" (BOCR) framework to develop a novel BOCR-uRTODIM solution method for multi-attribute decision making. Numerical experiments illustrate the effectiveness and robustness of the proposed method by comparing it with some known methods. An interesting result indicates that the risk aversion degree of the buyer increases as the variance of suppliers' attributes expands. The BOCR-uRTODIM could be a useful tool for utility companies to avoid losses and for associated suppliers to improve their attributes for a win in the clean energy industry. • Reverse auction for the clear energy device procurement is studied. • Utility companies' loss-averse behavior and incomplete information are considered. • Prospect theory is integrated into analytic hierarchy process for decision making. • A novel, effective, and robust method is proposed for determining the winner. • Managerial insights are drawn for utility companies in the clean energy industry. [ABSTRACT FROM AUTHOR]

This paper investigates a new winner determination problem with sustainable and responsive concerns under disruption risks for transportation service procurement auctions. In such an auction, a fourth party logistics (4PL) provider purchases transportation services from multiple third party logistics (3PL) providers. We develop a two-stage stochastic mixed-integer programming model that incorporates two features, including (i) a sustainable–responsive constraint to quantitatively describe the sustainability and responsiveness performance, and (ii) an effective hybrid mitigation strategy that combines the fortification policy with the temporary outsourcing service policy to mitigate disruptions. To determine winning 3PLs, a reduced scenario-based approximation approach is developed to solve the model and obtain a nearly optimal solution very quickly. Numerical experiments are conducted to illustrate the effectiveness and applicability of our model and method by using randomly generated instances as well as real data of a Chinese 4PL firm. Compared with existing studies, sensitivity analysis indicates that our proposed model can significantly reduce the 4PL's expected cost and improve the long-term competitive advantages. Managerial implications are also drawn for 4PLs to run a sustainable–responsive logistics system under disruptions in a cost-effective way. [ABSTRACT FROM AUTHOR]

Disruption risks and quantity discounts have not been explicitly studied in traditional winner determination problems. This paper investigates an innovative winner determination problem with accidental disruptions and quantity discounts for a fourth party logistics provider in a logistics service procurement auction. An effective hybrid strategy that integrates a fortification policy with an outside option policy is developed to mitigate possible disruptions. Integrating the hybrid strategy with a piecewise-linear discount function, a stochastic nonlinear winner determination model is constructed. Utilizing a linearization technique, such a nonlinear winner determination model can be reformulated as a mixed integer linear program. To obtain nearly optimal solutions, a scenario-based approximation method is developed, including a reduced scenario technique and a dual decomposition Lagrangian relaxation technique. Numerical experiments are conducted to illustrate the effectiveness and applicability of the proposed model and method. When the discount parameter decreases or the disruption probability increases, the fortification policy becomes more important for the logistics system. An interesting result indicates that both the auctioneer and bidders may benefit from considering the discount policy. Managerial implications are drawn for fourth party logistics providers to run a reliable logistics system in a cost-effective way. • A nonlinear winner determination (WD) with disruptions and discounts is studied. • Fortification and outside option policies are integrated to address disruptions. • The nonlinear WD is reformulated as a linear one by a superior expression method. • An effective approximation method is developed to obtain near-optimal solutions. • Managerial implications are drawn for 4PLs and 3PLs in the logistics industry. [ABSTRACT FROM AUTHOR]