Quantifying Opportunity Costs in Sequential Transportation Auctions for Truckload Acquisition

Abstract

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.