| Article ID: | iaor200968960 |
| Country: | United Kingdom |
| Volume: | 6 |
| Issue: | 1 |
| Start Page Number: | 70 |
| End Page Number: | 91 |
| Publication Date: | May 2009 |
| Journal: | International Journal of Operational Research |
| Authors: | Narahari Y, Hemachandra N, Tew Jeffrey D, Gautam Raghav Kumar, Prakash Hastagiri, Kulkarni Devadatta |
| Keywords: | discounts, purchasing, auctions |
In this paper, we design an optimal procurement mechanism for procuring multiple units of a single homogeneous item based on volume discount bids submitted by rational and intelligent suppliers. We develop an elegant auction mechanism, VD-OPT, that minimises the cost to the buyer, satisfying at the same time: Bayesian Incentive Compatibility (BIC); interim individual rationality.