Total-cost procurement auctions / Dimitris Kostamis in Management science, Vol. 55 N° 12 (Décembre 2009)  

Public ISBD [article]  inManagement science > Vol. 55 N° 12 (Décembre 2009) . - pp. 1985-1999 Titre : Total-cost procurement auctions : impact of suppliers'cost adjustments on auction format choice Type de document : texte imprimé Auteurs : Dimitris Kostamis, Auteur ; Damian R. Beil, Auteur ; Izak Duenyas, Auteur Article en page(s) : pp. 1985-1999 Note générale : Gestion Langues : Anglais (eng) Mots-clés : Procurement auctions Informed buyer Information disclosure Index. décimale : 658 Organisation des entreprises. Techniques du commerce Résumé : We consider sealed- and open-bid total-cost procurement auctions where two attributes are used for contract award decisions: price, which is bid by the supplier, and a fixed cost adjustment, which is included by the buyer to capture nonprice factors such as logistics costs. Suppliers know only their own true production cost and their own cost adjustment, and the buyer does not know the suppliers' true production costs but does know all suppliers' cost adjustments, which she herself sets in order to make an informed total-cost decision. The buyer, who seeks to minimize her total (price and cost adjustment) procurement cost, can choose to run a first-price sealed-bid auction, where suppliers' bids are affected by their beliefs about each other's total costs, or a descending open-bid auction, where only the actual realizations of suppliers' total costs drive the auction outcome. We characterize the buyer's choice between the two formats as a threshold decision over suppliers' cost adjustments and analyze the effect of supplier beliefs on her decision. We also study the impact of additional suppliers on the buyer's decision, the effect of correlation between suppliers' production costs and their cost adjustments, and additive as well as multiplicative total-cost functions. The results suggest that procurement managers can use their evaluations of suppliers' cost adjustments to make better auction format decisions. DEWEY : 658 ISSN : 0025-1909 En ligne : http://mansci.journal.informs.org/cgi/content/abstract/55/12/1985?maxtoshow=&hit [...] [article] Total-cost procurement auctions : impact of suppliers'cost adjustments on auction format choice [texte imprimé] / Dimitris Kostamis, Auteur ; Damian R. Beil, Auteur ; Izak Duenyas, Auteur . - pp. 1985-1999. Gestion Langues : Anglais (eng) in Management science > Vol. 55 N° 12 (Décembre 2009) . - pp. 1985-1999 Mots-clés : Procurement auctions Informed buyer Information disclosure Index. décimale : 658 Organisation des entreprises. Techniques du commerce Résumé : We consider sealed- and open-bid total-cost procurement auctions where two attributes are used for contract award decisions: price, which is bid by the supplier, and a fixed cost adjustment, which is included by the buyer to capture nonprice factors such as logistics costs. Suppliers know only their own true production cost and their own cost adjustment, and the buyer does not know the suppliers' true production costs but does know all suppliers' cost adjustments, which she herself sets in order to make an informed total-cost decision. The buyer, who seeks to minimize her total (price and cost adjustment) procurement cost, can choose to run a first-price sealed-bid auction, where suppliers' bids are affected by their beliefs about each other's total costs, or a descending open-bid auction, where only the actual realizations of suppliers' total costs drive the auction outcome. We characterize the buyer's choice between the two formats as a threshold decision over suppliers' cost adjustments and analyze the effect of supplier beliefs on her decision. We also study the impact of additional suppliers on the buyer's decision, the effect of correlation between suppliers' production costs and their cost adjustments, and additive as well as multiplicative total-cost functions. The results suggest that procurement managers can use their evaluations of suppliers' cost adjustments to make better auction format decisions. DEWEY : 658 ISSN : 0025-1909 En ligne : http://mansci.journal.informs.org/cgi/content/abstract/55/12/1985?maxtoshow=&hit [...]

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When does it pay to delay supplier qualification? / Zhixi Wan in Management science, Vol. 58 N° 11 (Novembre 2012)  

Public ISBD [article]  inManagement science > Vol. 58 N° 11 (Novembre 2012) . - pp. 2057-2075 Titre : When does it pay to delay supplier qualification? : Theory and experiments Type de document : texte imprimé Auteurs : Zhixi Wan, Auteur ; Damian R. Beil, Auteur ; Elena Katok, Auteur Année de publication : 2013 Article en page(s) : pp. 2057-2075 Note générale : Management Langues : Anglais (eng) Mots-clés : Procurement auctions Supplier qualification Experiments Résumé : We study a procurement setting in which the buyer seeks a low price but will not allocate the contract to a supplier who has not passed qualification screening. Qualification screening is costly for the buyer, involving product tests, site visits, and interviews. In addition to a qualified incumbent supplier, the buyer has an entrant of unknown qualification. The buyer wishes to run a price-only, open-descending reverse auction between the incumbent and the entrant, and faces a strategic choice about whether to perform qualification screening on the entrant before or after the auction. We analytically study the buyer's optimal strategy, accounting for the fact that under postauction qualification, the incumbent knows he could lose the auction but still win the contract. In our analysis, we derive the incumbent's optimal bidding strategy under postauction qualification and find that he follows a threshold structure in which high-cost incumbents hold back on bidding—or even boycott the auction—to preserve their profit margin, and only lower-cost incumbents bid to win. These results are strikingly different from the usual open-descending auction analysis where all bidders are fully qualified and bidding to win is always a dominant strategy. We test our analytical results in the laboratory, with human subjects. We find that qualitatively our theoretical predictions hold up quite well, although incumbent suppliers bid somewhat more aggressively than the theory predicts, making buyers more inclined to use postauction qualification. ISSN : 0025-1909 En ligne : http://mansci.journal.informs.org/content/58/11/2057.abstract [article] When does it pay to delay supplier qualification? : Theory and experiments [texte imprimé] / Zhixi Wan, Auteur ; Damian R. Beil, Auteur ; Elena Katok, Auteur . - 2013 . - pp. 2057-2075. Management Langues : Anglais (eng) in Management science > Vol. 58 N° 11 (Novembre 2012) . - pp. 2057-2075 Mots-clés : Procurement auctions Supplier qualification Experiments Résumé : We study a procurement setting in which the buyer seeks a low price but will not allocate the contract to a supplier who has not passed qualification screening. Qualification screening is costly for the buyer, involving product tests, site visits, and interviews. In addition to a qualified incumbent supplier, the buyer has an entrant of unknown qualification. The buyer wishes to run a price-only, open-descending reverse auction between the incumbent and the entrant, and faces a strategic choice about whether to perform qualification screening on the entrant before or after the auction. We analytically study the buyer's optimal strategy, accounting for the fact that under postauction qualification, the incumbent knows he could lose the auction but still win the contract. In our analysis, we derive the incumbent's optimal bidding strategy under postauction qualification and find that he follows a threshold structure in which high-cost incumbents hold back on bidding—or even boycott the auction—to preserve their profit margin, and only lower-cost incumbents bid to win. These results are strikingly different from the usual open-descending auction analysis where all bidders are fully qualified and bidding to win is always a dominant strategy. We test our analytical results in the laboratory, with human subjects. We find that qualitatively our theoretical predictions hold up quite well, although incumbent suppliers bid somewhat more aggressively than the theory predicts, making buyers more inclined to use postauction qualification. ISSN : 0025-1909 En ligne : http://mansci.journal.informs.org/content/58/11/2057.abstract

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