A meta-auction for on-demand transportation procurement in industry 5.0

Abstract

The Cyber-Physical Internet (CPI) is a cutting-edge concept that brings together physical systems and cyber technologies to enable seamless interaction between the physical and virtual worlds. This innovative approach is revolutionizing the transportation industry by paving the way for a new era of logistics and transport networks. Introducing CPI into the procurement of transport services is leading to a re-evaluation of fundamental issues such as routing, mode choice and real-time pricing. This paper provides an in-depth discussion on the application of transport services procurement auctions in a CPI environment, with the aim of establishing a novel CPI-based trading platform for transport services using CPI technology, and calls the methodology proposed in this paper a meta-auction. The transport route allocation quandary is simplified into an auction model, where carriers truthfully submit unit route costs, and the winning carrier and pricing are determined using the single-unit Vickrey-Clark-Groves (VCG) method. To address scenarios with multiple carriers per network segment node, this paper proposes the multi-unit VCG auction method. Furthermore, the weighted affine VCG auction method is introduced, considering the weight of each network segment route. All three mechanisms are generalized VCG auctions, ensuring incentive compatibility, budget balance, allocation efficiency, and individual rationality. Case studies validate the effectiveness of the proposed methods, offering managerial insights based on key findings that are valuable for industry professionals and researchers in the CPI domain. This study highlights the transformative potential of CPI to revolutionize auctions for the procurement of transport services and underlines the benefits of combining physical and cyber technologies in auction design.