Bid Price Optimization in Simultaneous Truckload Transportation Auctions

In this thesis, simultaneous truckload transportation auctions are studied from the truckload carriers' perspective. We look at the bid determination problem faced by carriers in transportation procurement auctions. The auction mechanism is that a shipper requests quotes from the carriers and purchases the services of the lowest bidder. Bidders submit one bid in a concealed fashion and must place bids on multiple lanes simultaneously. Bid prices must be as high as possible for more profit but as low as possible for winning the lanes. In addition, the carriers do not know their operating cost until the end of the auctions because of the uncertainty of winning the lanes. Therefore, we model the problem as a stochastic bid optimization problem for maximizing of the carrier's expected profit and propose a coordinate search algorithm for solving this problem. The algorithm is investigated when the lowest bid of the competing carriers is an independent continuous random variable which is normally and empirically distributed. We conduct a simulation study to show the impact of the coordinate search algorithm and positive results on the carrier's profit are obtained.