Combinatorial reverse auction based on revelation of Lagrangian multipliers

Recently, researchers have proposed decision support tool for generating suggestions for bids in combinatorial reverse auction based on disclosure of bids. An interesting issue is to design an effective mechanism to guide the bidders to collectively minimize the overall cost without explicitly disclosing the bids. We consider a winner determination problem for combinatorial reverse auction and study how to support the bidders’ decisions without explicitly disclosing the bids of others. We propose an information revelation scheme for a buyer to guide the sellers to generate potential winning bids to minimize the overall cost. The main results include: (1) a problem formulation for the combinatorial reverse auction problem; (2) a solution methodology based on Lagrangian relaxation; (3) a scheme to guide the sellers to generate potential winning bids for the bidders in multi-round combinatorial reverse auctions based on revelation of Lagrange multipliers; (4) a heuristic algorithm for finding a near-optimal feasible solution and (5) results and analysis of our solution algorithms.