Production and Operations Management 2007
Market‐Based Allocation with Indivisible Bids
Abstract
We study multiunit double auctions accepting bids with indivisibility constraints. Modeling the auction problem as a Multiple Choice Knapsack Problem and using dynamic programming, we show that incremental computations during bid processing can speed the handling of key auction operations such as clearing and quoting. We propose different price‐quote policies and study their influence on the efficiency of market‐based allocation. Using a reconfigurable manufacturing scenario where agents trade large quantities of multiple goods, we demonstrate potential benefits of supporting indivisibility constraints in bidding. These benefits are highly sensitive to the form of price quote provided, indicating interesting tradeoffs in communication and allocation efficiency.
- DOI
- 10.1111/j.1937-5956.2007.tb00275.x
- Sources
- openalex