Application of multi-dimensional procurement auction in single-period inventory models

Procurement is one of the major activities in the Manufacturing Resource Planning (MRP II), which is closely coupled with inventory management. Any improvement in this area will have a direct impact on the performance of the entire supply chain. Auction mechanism can be a successful procurement method when there are several potential suppliers available. In this work we consider a single-period inventory model when the selection of the supplier being done through a reverse auction with bids consisted of several attributes, namely price, shortage quantity and lead time. The multidimensionality of the bid increases the complexity of the underlying problem creating a need for an approach to determine an approximate optimal target level. This is needed for the initiation of the auction and the procurement process. Monte-Carlo simulation method was used to investigate the goodness of the approximate analytical method. Keywords Reverse auction, inventory, multi-attribute decision making, mu...

• Type: Journal
• Year: 2008
• Where: ANOR
• Authors: Pooya Farahvash, Tayfur Altiok
• Keywords: ANOR 2008, Procurement, Reverse Auction, Successful Procurement Method