Solving a sealed-bid reverse auction problem by multiple-criterion decision-making methods

AbstractThis study presents a model for solving the sealed-bid, multiple-issue reverse auction problem, using multiple-criterion decision-making approaches, such that the interests of both the buyer and the supplier are satisfied. On the supplier side, the bid construction process is formulated as a fuzzy multiple-objective programming problem, and is solved using an exhausted enumeration algorithm which adjusts the production plan in accordance with the buyer’s demand, based on the current master production schedule (MPS) and the available-to-promise (ATP) inventory. The use of the information of MPS and ATP enables the supplier to make accurate estimates of the production costs associated with specific delivery dates, and thus facilitates the construction of a bid which is both profitable and likely to secure the contract. On the buyer side, the winner determination process is treated as a multiple-attribute decision-making problem, and is solved using the Technique for Order Preference by Similarity to Ideal Solution (TOPSIS) method. The validity of the proposed approach is demonstrated via an illustrative example

Building Political Collusion: Evidence from Procurement Auctions

We investigate the relationship between the time politicians stay in office and the functioning of public procurement. To this purpose, we collect a data set on the Italian municipal governments and all the procurement auctions they administered between 2000 and 2005. Identification is achieved through the introduction of a two-term limit for the mayor in March 1993: since elections were not coordinated across cities, and previous terms were not counted in the limit, mayors appointed right before the reform could be reelected for two additional terms, while the others for one only. Our primary finding is that one extra term in office deteriorates public spending. In fact, it decreases the number of bidders and, most importantly, the winning rebate. Interestingly, we also find that the probability that the same firm is awarded more auctions, or that the winning firm is local, increases with time in office. These results are compatible with the predictions of a model of favoritism in repeated procurement auctions, where time reveals collusive types, thus increasing the value of illegal connections at the expense of higher procurement costs.procurement auction, collusion, public works, time in office

Addressing stability issues in mediated complex contract negotiations for constraint-based, non-monotonic utility spaces

Negotiating contracts with multiple interdependent issues may yield non- monotonic, highly uncorrelated preference spaces for the participating agents. These scenarios are specially challenging because the complexity of the agents’ utility functions makes traditional negotiation mechanisms not applicable. There is a number of recent research lines addressing complex negotiations in uncorrelated utility spaces. However, most of them focus on overcoming the problems imposed by the complexity of the scenario, without analyzing the potential consequences of the strategic behavior of the negotiating agents in the models they propose. Analyzing the dynamics of the negotiation process when agents with different strategies interact is necessary to apply these models to real, competitive environments. Specially problematic are high price of anarchy situations, which imply that individual rationality drives the agents towards strategies which yield low individual and social welfares. In scenarios involving highly uncorrelated utility spaces, “low social welfare” usually means that the negotiations fail, and therefore high price of anarchy situations should be avoided in the negotiation mechanisms. In our previous work, we proposed an auction-based negotiation model designed for negotiations about complex contracts when highly uncorrelated, constraint-based utility spaces are involved. This paper performs a strategy analysis of this model, revealing that the approach raises stability concerns, leading to situations with a high (or even infinite) price of anarchy. In addition, a set of techniques to solve this problem are proposed, and an experimental evaluation is performed to validate the adequacy of the proposed approaches to improve the strategic stability of the negotiation process. Finally, incentive-compatibility of the model is studied.Spain. Ministerio de Educación y Ciencia (grant TIN2008-06739-C04-04

Collaborative Models for Supply Networks Coordination and Healthcare Consolidation

This work discusses the collaboration framework among different members of two complex systems: supply networks and consolidated healthcare systems. Although existing literature advocates the notion of strategic partnership/cooperation in both supply networks and healthcare systems, there is a dearth of studies quantitatively analyzing the scope of cooperation among the members and its benefit on the global performance. Hence, the first part of this dissertation discusses about two-echelon supply networks and studies the coordination of buyers and suppliers for multi-period procurement process. Viewing the issue from the same angel, the second part studies the coordination framework of hospitals for consolidated healthcare service delivery. Realizing the dynamic nature of information flow and the conflicting objectives of members in supply networks, a two-tier coordination mechanism among buyers and suppliers is modeled. The process begins with the intelligent matching of buyers and suppliers based on the similarity of users profiles. Then, a coordination mechanism for long-term agreements among buyers and suppliers is proposed. The proposed mechanism introduces the importance of strategic buyers for suppliers in modeling and decision making process. To enhance the network utilization, we examine a further collaboration among suppliers where cooperation incurs both cost and benefit. Coalitional game theory is utilized to model suppliers\u27 coalition formation. The efficiency of the proposed approaches is evaluated through simulation studies. We then revisit the common issue, the co-existence of partnership and conflict objectives of members, for consolidated healthcare systems and study the coordination of hospitals such that there is a central referral system to facilitate patients transfer. We consider three main players including physicians, hospitals managers, and the referral system. As a consequence, the interaction within these players will shape the coordinating scheme to improve the overall system performance. To come up with the incentive scheme for physicians and aligning hospitals activities, we define a multi-objective mathematical model and obtain optimal transfer pattern. Using optimal solutions as a baseline, a cooperative game between physicians and the central referral system is defined to coordinate decisions toward system optimality. The efficiency of the proposed approach is examined via a case study

Combinatorial Auction-based Mechanisms for Composite Web Service Selection

Composite service selection presents the opportunity for the rapid development of complex applications using existing web services. It refers to the problem of selecting a set of web services from a large pool of available candidates to logically compose them to achieve value-added composite services. The aim of service selection is to choose the best set of services based on the functional and non-functional (quality related) requirements of a composite service requester. The current service selection approaches mostly assume that web services are offered as single independent entities; there is no possibility for bundling. Moreover, the current research has mainly focused on solving the problem for a single composite service. There is a limited research to date on how the presence of multiple requests for composite services affects the performance of service selection approaches. Addressing these two aspects can significantly enhance the application of composite service selection approaches in the real-world. We develop new approaches for the composite web service selection problem by addressing both the bundling and multiple requests issues. In particular, we propose two mechanisms based on combinatorial auction models, where the provisioning of multiple services are auctioned simultaneously and service providers can bid to offer combinations of web services. We mapped these mechanisms to Integer Linear Programing models and conducted extensive simulations to evaluate them. The results of our experimentation show that bundling can lead to cost reductions compared to when services are offered independently. Moreover, the simultaneous consideration of a set of requests enhances the success rate of the mechanism in allocating services to requests. By considering all composite service requests at the same time, the mechanism achieves more homogenous prices which can be a determining factor for the service requester in choosing the best composite service selection mechanism to deploy

A theoretical and computational basis for CATNETS

The main content of this report is the identification and definition of market mechanisms for Application Layer Networks (ALNs). On basis of the structured Market Engineering process, the work comprises the identification of requirements which adequate market mechanisms for ALNs have to fulfill. Subsequently, two mechanisms for each, the centralized and the decentralized case are described in this document. These build the theoretical foundation for the work within the following two years of the CATNETS project. --Grid Computing

Theoretical and Computational Basis for Economical Ressource Allocation in Application Layer Networks - Annual Report Year 1

This paper identifies and defines suitable market mechanisms for Application Layer Networks (ALNs). On basis of the structured Market Engineering process, the work comprises the identification of requirements which adequate market mechanisms for ALNs have to fulfill. Subsequently, two mechanisms for each, the centralized and the decentralized case are described in this document. --Grid Computing

Development of multi-criteria decision analysis models for bidding and contractor selection

Estimating and bidding a job is one of those essential processes at the heart of a contractor's business. Risk and uncertainty are major considerations in bidding decisions for construction projects. Numerous factors need to be taken into account when making bidding decisions which make them multi-criteria decisions. The present study focuses on developing multi-criteria decision making models to assist in bidding decisions. The Analytical Hierarchy Process (AHP), which is a multi-criteria decision making tool, is used to quantify risk encountered in bidding decisions. The AHP has been employed to model both the bid/no bid and mark-up decisions. The data required for this study was collected from thirty firms operating in Gaza Strip by way of a written structured questionnaire. The data was analysed using the Criterium Decision Plus Software based on the AHP. Ten factors were selected to affect bid/no bid decisions while eleven factors were chosen to influence mark-up decision. Results from the questionnaire survey supported previous studies that profit is not the most important factor in making bid/no bid and mark-up decisions. The results also indicate that the most important factors when making the bid/no bid decision are: the 'need for work' followed by the 'company strength in industry' and 'payment methods'. For the mark-up decision, the 'need for work', 'owner/client and consultant identity' and 'project size' are the most important factors. A real life case study was used to demonstrate the application of the two models. Twelve meetings were conducted with a contractor working in Gaza Strip construction industry in order to gather the required data for the validation. The case study consisted of three different projects, road works, electromechanical and building projects, and the contractor had to make a decision on which projects to bid for and then which of them will result in a higher mark-up. The validity of the two models was confirmed by applying a two-stage Linear Programming (LP) approach to the data obtained from the case study. The results from the LP approach agreed with the outcome from the AHP. The developed AHP models can be easily used by the contractors to assist in making bid/no bid and mark-up decisions. This study investigates the Fuzzy Sets Theory, which is a mathematical approach used to characterise and quantify uncertainty, as a bidding strategy. This study summarises the work that has been done to-date reviewing the fundamental concepts and applications of the Fuzzy Sets Theory in construction. Fuzzy Sets Theory was found to be used widely in construction research but most studies were found theoretical. The research also examines the challenges of using the reverse auction as an open bidding process. In construction industry, reverse auction is one such technique that uses secured Internet technology for tendering process. Advantages of on-line bidding include: the ability to submit more than one bid, time benefits, increasing competitiveness among contractors and attracting unknown bidders. The main drawback of reverse auctions is that the award of the product/service will be based on the price rather than on the quality of the product or service. Furthermore, security and legal issues need further considerations when forming e-contracts for the procurement of construction services. Selecting a suitable contractor to execute a particular project is an important decision for the client to take. Awarding construction contracts based on the price only is not always a successful strategy for contractor selection as it could result in construction delays and cost overruns. In addition to price, factors such as quality and safety need to be taken into account when making the contractor selection decision. In this study, two methods for contractor selection were compared: the points method and the Analytical Hierarchy Process. The two methods were applied to a real life case study for contractor selection. Financial and Quality factors were considered to affect the contractor selection decision. Both methods resulted in selecting the same contractor for executing the project under consderation. The Analytical Hierarchy process provides a flexible and computer based method for contractor selection decision.EThOS - Electronic Theses Online ServiceGBUnited Kingdo