Efficient auction mechanism for allocation and pricing of cloud manufacturing services

Cloud manufacturing (CMfg) is an emerging service-oriented paradigm that collects dispersed manufacturing resources and provides on-demand services on the cloud platform. From an operational perspective, the major issue in implementing CMfg is how to schedule services to satisfy requests of clients and at what prices. The article designs an efficient one-side Vickrey–Clarke–Groves (O-VCG) auction mechanism to maximize social welfare with truthful bidding from clients. The O-VCG auction mechanism is proved to be incentive compatible, individually rational, approximate allocative efficient, and budget balanced. We consider a centralized operating mode and propose a service allocation model. This service allocation model can achieve an efficient allocation of geographically dispersed services to clients. The computational results show that the proposed O-VCG achieves better social welfare, a higher utility of cloud platform and clients, and a better order completion rate as the number of service windows, the number of clients, and service region increase. We also find that a non-profit-oriented cloud platform can achieve optimal social welfare, while a profit-oriented cloud platform can still yield near optimal social welfare when making profits for itself. A joint cloud platform will yield higher social welfare than several independent cloud platforms, even for the same area size.