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.