The principal purpose of this research is to quantify opportunity costs in sequential transportation auctions. The focus of the study is a transportation marketplace with time-sensitive truckload pickup-and-delivery requests. Two carriers compete for service requests; each arriving service request triggers an auction in which carriers compete with each other to win the right of servicing the load. An expression for evaluating opportunity costs is derived. The impact of evaluating opportunity costs is shown to be dependent on the competitive market setting. A simulation framework is used to evaluate different strategies. Some results and the overall simulation framework are also discussed.
Get full access to this article
View all access options for this article.
References
1.
ZhuK.Information Transparency of Business-to-Business Electronic Markets: A Game-Theoretic Analysis.Management Science, Vol. 50, No. 5, 2004, pp. 670–685.
2.
NandirajuS., and ReganA.. Freight Transportation Electronic Marketplaces: Survey of Market Clearing Mechanisms and Exploration of Important Research Issues. Presented at 84th Annual Meeting of the Transportation Research Board, Washington, D.C., 2004.
3.
MillsG.Uncertainty, Cost Interdependence and Opportunity-Cost Pricing.Journal of Industrial Economics, Vol. 13, No. 3, 1965, pp. 235–242.
4.
SteinerH. M.Opportunity Cost, Capital Recovery, and Profit Analysis of Logistics Systems.Transportation Journal, Vol. 13, No. 1, 1973, pp. 15–22.
5.
ZhangA. M., and ZhangY. M.. Concession Revenue and Optimal Airport Pricing.Transportation Research, Vol. 33E, No. 4, 1997, pp. 287–296.
6.
WillisK. G., GarrodG. D., and HarveyD. R.. Review of Cost-Benefit Analysis as Applied to the Evaluation of New Road Proposals in the UK.Transportation Research, Vol. 3D, No. 3, 1998, pp. 141–156.
7.
RatcliffM. S. W., and BischoffE. E.. Allowing for Weight Considerations in Container Loading.Or Spektrum, Vol. 20, No. 1, 1998, pp. 65–71.
8.
PolsbyD. R.Airport Pricing of Aircraft Takeoff and Landing Slots: An Economic Critique of Federal Regulatory Policy.California Law Review, Vol. 89, No. 3, 2001, pp. 779–816.
9.
SmithV. L., and WalkerJ. M.. Rewards, Experience and Decision Costs in 1st Price Auctions.Economic Inquiry, Vol. 31, No. 2, 1993, pp. 237–245.
10.
PerryM. K., and SakovicsJ.. Auctions for Split-Award Contracts.Journal of Industrial Economics, Vol. 51, No. 2, 2003, pp. 215–242.
11.
FigliozziM. A., MahmassaniH. S., and JailletP.. Framework for Study of Carrier Strategies in Auction-Based Transportation Marketplace. In Transportation Research Record: Journal of the Transportation Research Board, No. 1854, Transportation Research Board of the National Academies, Washington, D.C., 2003, pp. 162–170.
12.
FigliozziM. A., MahmassaniH. S., and JailletP.. Competitive Performance Assessment of Dynamic Vehicle Routing Technologies Using Sequential Auctions. In Transportation Research Record: Journal of the Transportation Research Board, No. 1882, Transportation Research Board of the National Academies, Washington, D.C., 2004, pp. 10–18.
13.
FigliozziM. A., MahmassaniH. S., and JailletP.. Impacts of Auction Settings on the Performance of Truckload Transportation Marketplaces. In Transportation Research Record: Journal of the Transportation Research Board, No. 1906, Transportation Research Board of the National Academies, Washington, D.C., 2005, pp. 89–96.
14.
FigliozziM. A.Performance and Analysis of Spot Truck-Load Procurement Markets Using Sequential Auctions. PhD. thesis. School of Engineering, University of Maryland, College Park, 2004.
15.
VickreyW.Counterspeculation, Auctions and Competitive Sealed Tenders.Journal of Finance, Vol. 16, 1961, pp. 8–37.
16.
YangJ., JailletP., and MahmassaniH.. Real-Time Multivehicle Truck-load Pickup and Delivery Problems.Transportation Science, Vol. 38, No. 2, 2004, pp. 135–148.
