A lotting method for electronic reverse auctions

U. Kaymak, J.P. Verkade, H.A.B. Braake, te

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An increasing number of commercial companies are using online reverse auctions for their sourcing activities. In reverse auctions, multiple suppliers bid for a contract from a buyer for selling goods and/or services. Usually, the buyer has to procure multiple items, which are typically divided into lots for auctioning purposes. By steering the composition of the lots, a buyer can increase the attractiveness of its lots for the suppliers, which can then make more competitive offers, leading to larger savings for the procuring party. In this paper, a clustering-based heuristic lotting method is proposed for reverse auctions. Agglomerative clustering is used for determining the items that will be put in the same lot. A suitable metric is defined, which allows the procurer to incorporate various approaches to lotting. The proposed lotting method has been tested for the procurement activities of a consumer packaged goods company. The results indicate that the proposed strategy leads to 2-3% savings, while the procurement experts confirm that the lots determined by the proposed method are acceptable given the procurement goals.
Originele taal-2Engels
Plaats van productieRotterdam
UitgeverijErasmus Universiteit Rotterdam
Aantal pagina's16
StatusGepubliceerd - 2003

Publicatie series

NaamERIM Report Series Research in Management
VolumeERS-2003-042-LIS

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Citeer dit

Kaymak, U., Verkade, J. P., & Braake, te, H. A. B. (2003). A lotting method for electronic reverse auctions. (ERIM Report Series Research in Management; Vol. ERS-2003-042-LIS). Rotterdam: Erasmus Universiteit Rotterdam.