Sustainable–responsive winner determination for transportation service procurement auctions under accidental disruptions

Xiaohu Qian, Mingqiang Yin, Felix T.S. Chan, Jiahua Zhang, Min Huang

Research output: Journal article publicationJournal articleAcademic researchpeer-review

Abstract

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.

Original languageEnglish
Article number128833
JournalJournal of Cleaner Production
Volume320
DOIs
Publication statusPublished - 20 Oct 2021

Keywords

  • Disruption risks
  • Mitigation strategy
  • Reduced scenario-based approximation
  • Sustainability and responsiveness
  • Winner determination

ASJC Scopus subject areas

  • Renewable Energy, Sustainability and the Environment
  • Environmental Science(all)
  • Strategy and Management
  • Industrial and Manufacturing Engineering

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