Optimal allocation of purchase orders in dynamic bidding

Optimal allocation of purchase orders in dynamic bidding

0.00 Avg rating0 Votes
Article ID: iaor20082568
Country: South Korea
Volume: 33
Issue: 3
Start Page Number: 322
End Page Number: 328
Publication Date: Sep 2007
Journal: Journal of the Korean Institute of Industrial Engineers
Authors: , ,
Keywords: bidding, programming: linear
Abstract:

Highly standardized products are suitable for automated purchasing using electronic commerce technology, where the price becomes the most important factor. Suppliers can change the prices dynamically based on the inventory level and market situation in order to maximize the sales and profit. In the virtual marketplace where multiple customers purchase multiple standardized products from multiple suppliers repetitively, customers can purchase the required amount of each item as a dynamic bidding by allocating purchase orders to the suppliers based on the current price. Customers need a method to quickly determine the optimal allocation of orders to the suppliers using the dynamically changing data to minimize the total cost. We present an LP model which minimizes the sum of the total price plus transportation cost for this problem. Simulation results using random data show meaningful reduction of the total cost.

Reviews

Required fields are marked *. Your email address will not be published.