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Umi-Umd-1475.Pdf (1.983Mb) ABSTRACT Title of Dissertation / Thesis: PERFORMANCE AND ANALYSIS OF SPOT TRUCK -LOAD PROCUREMENT MARKETS USING SEQUENTIAL AUCTIONS Miguel Andres Figliozzi, Ph.D., 2004 Dissertation / Thesis Directed By: Professor Hani Mahmassani, Civil and Env ironmental Engineering Department Competition in a transportation marketplace is studied under different supply/demand conditions, auction formats, and carriers’ behavioral assumptions. Carriers compete in a spot truck -load procurement market (TLPM) using sequential auctions. Carrier participation in a TLPM requires the ongoing solution of two distinct problems: profit maximization problem (chose best bid) and fleet management problem (best fleet assignment to serve acquired shipments). Sequential aucti ons are used to model an ongoing transportation market, where carrier competition is used to study carriers’ dynamic vehicle routing technologies and decision making processes. Given the complexity of the bidding/fleet management problem, carriers can tack le it with different levels of sophistication. Carriers’ decision making processes and rationality/bounded rationality assumptions are analyzed. A framework to study carrier behavior in TL sequential auctions is presented. Carriers’ behavior is analyzed as a function of fleet management technology, auction format, carrier bounded rationality, market settings, and decision making complexity. The effects of fleet management technology asymmetries on a competitive marketplace are studied. A methodology to com pare dynamic fleet management technologies is developed. Under a particular set of bounded rationality assumptions, bidding learning mechanisms are studied; reinforcement learning and fictitious play implementations are discussed. The performance of differ ent auction formats is studied. Simulated scenarios are presented and their results discussed. PERFORMANCE AND ANALYSIS OF SPOT TRUCK -LOAD PROCUREMENT MARKETS USING SEQUENTIAL AUCTIONS By Miguel Andres Figliozzi Dissertation submitted to the Faculty of the Graduate School of the University of Maryland, College Park, in partial fulfillment of the requirements for the degree of Doctor of Philosophy 2004 Advisory Committee: Professor Hani Mahmassani, Chair Pro fessor Patrick Jaillet Professor Ali Haghani Professor Bruce Golden Assistant Professor Elise Miller -Hooks © Copyright by Miguel Andres Figliozzi 2004 Table of Contents Tab le of Contents .......................................................................................................... ii List of Tables ................................................................................................................ v List of Figures .............................................................................................................. vi List of Figures .............................................................................................................. vi Chapter 1: Introduction.................................................................................................1 1.1. Motivation.......................................................................................................... 1 1.2. Shipper -Carrier Pr ocurement Structures ............................................................ 4 1.3. Spot Truck -load Procurement Market using Sequential Auctions .................. 10 1.4. Research Context and General Approach ........................................................ 13 1.5. Research Objectives and Contributions........................................................... 16 1.6. Dissertation Organization ................................................................................ 17 1.7. Notation Convention........................................................................................ 19 Chapter 2: Game Theoretic Auction Literature Survey .............................................. 22 2.1. Auctions as a pricing mechan ism .................................................................... 22 2.2. Basic Auction Terminology and Concepts ...................................................... 24 2.2.1. Strategic Equivalence among Auctions .................................................... 26 2.3. The Symmetric Independent Private Values Model ........................................ 28 2.3.1. Model Assumptions .................................................................................. 29 2.3.2. Game Theore tic Solution to the SIPV Model ........................................... 30 2.3.3. A Reverse Auction Model ........................................................................ 36 2.3.4. Extension to Price -elastic Demand ........................................................... 37 2.4. Characteristics of Spot TL Procurement Market using Sequential Auctions . 38 2.5. Extensions to the SIPV Model ......................................................................... 41 2.5.1. Economic Models ..................................................................................... 43 2.5.2. Operations Research Models .................................................................... 49 2.6. Summary .......................................................................................................... 52 Chapter 3: Conceptual Formulation............................................................................ 54 3.1. Problem Context .............................................................................................. 54 3.2. Formulation of a TLPM problem as a Game (Equilibrium Formulation) ....... 56 3.2.1. Players (carriers) ....................................................................................... 58 3.2.2. Stages/Auctions......................................................................................... 58 3.2.3. History and Public Information ................................................................ 59 3.2.4. Private Information ................................................................................... 59 3.2.5. Bidding, Payment and Profit functions..................................................... 62 3.2.6. Equilibrium Formulation .......................................................................... 64 3.2.7. Online TLPM ............................................................................................ 65 3.3. Sources of Complexity Analysis ...................................................................... 66 3.3.1. Technical Problems ................................................................................... 67 3.3.2. Conceptual Problems ................................................................................ 68 3.4. Simulation Framework ..................................................................................... 69 3.4.1. Market Geographic Area ........................................................................... 71 3.4.2. Time -Windows ......................................................................................... 72 ii 3.4.3. Arrival Rates ............................................................................................. 74 3.5. Performance Measures - Auction Mechanisms ............................................... 75 3.5.1. Auction Me chanisms ................................................................................ 75 3.5.2. Direct and Truthful Mechanisms .............................................................. 76 3.5.3. Incentive compatibility ............................................................................. 76 3.5.4. Individual Rationality ............................................................................... 77 3.5.5. Efficient Mechanism ................................................................................. 78 3.5.6. Carrier and Shipper Performance Measures ............................................. 79 3.6. Summary .......................................................................................................... 82 Chapter 4: Technology Based Competition................................................................ 83 4.1. Industr y competition, Costing, and DVR Technologies .................................. 83 4.2. Classical and Competitive Approaches to Analyze Algorithms ...................... 86 4.3. Applying Competitive Analysis to TLPM Problems ....................................... 91 4.4. Auction Analysis of Algorithms ...................................................................... 94 4.4.1. Shipment Cost Function............................................................................ 96 4.4.2. Solving for the Optimal Bid ...................................................................... 97 4.4.3. Optimal Bid Analysis .............................................................................. 100 4.4.4. Optimal Bid Complexity ......................................................................... 101 4.5. Relaxations of Auction Analysis ................................................................... 102 4.5.1. Acceptance/Rejection Online Problem ................................................... 103 4.5.2. Average Case Analysis of DVR Technologies ....................................... 104 4.6. Comparing Competitive and Auction Analysis of Algorithms ...................... 106 4.7. Applying the Proposed Methodology ............................................................ 108 4.7.1. Formulations and Solutions of the DVR Problem .................................. 108 4.7.2. Static Cost of Serving a Shipment .........................................................
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