Chapter 11

Procurement Auctions

Damian R. Beil
Stephen M. Ross School of Business, University of Michigan, Ann Arbor, Michigan 48109, dbeil@umich.edu

Abstract
This tutorial introduces the basic ingredients of procurement auction research. After discussing the classic market-pricing logic of the open-descending auction, we demonstrate how simple modeling embellishments can extend the market-pricing auction logic to also capture key operational realities and trade-offs encountered in procurement practice. This tutorial should be of value to anyone interested in studying competitive bidding in supply chains.

Key word: competitive bidding; auctions; procurement; sourcing; supply chain

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Citation Information:

D. B. Beil. 2010. Procurement auctions. J. J. Hasenbein, ed. TutORials in Operations Research, Vol. 7. INFORMS, Hanover, MD, pp. 248–259.