Article ID: | iaor2009293 |
Country: | United States |
Volume: | 35 |
Issue: | 4 |
Start Page Number: | 609 |
End Page Number: | 637 |
Publication Date: | Oct 2005 |
Journal: | Decision Sciences |
Authors: | Ghosh Soumen, Soni Samit, Murthy Nagesh N. |
Keywords: | decision theory, heuristics |
This paper provides a fundamental building block to facilitate sourcing and allocation decisions for make-to-order items. We specifically address the buyer's vendor selection problem for make-to-order items where the goal is to minimize sourcing and purchasing costs in the presence of fixed costs, shared capacity constraints, and volume-based discounts for bundles of items. The potential suppliers for make-to-order items provide quotes in the form of single sealed bids or participate in a dynamic auction involving open bids. A solution to our problem can be used to determine winning bids amongst the single sealed bids or winners at each stage of a dynamic auction.