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Reverse auction with buyer-supplier negotiation using bi-level distributed programming

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  • Cheng, Chi-Bin

Abstract

This study presents a framework for solving a sealed-bid, multi-issue, and multi-sourcing reverse auction problem in which negotiation takes place between the buyer and the suppliers during the bidding process. The problem is formulated as a bi-level distributed programming model in which the buyer is the upper level decision maker, while suppliers at the lower level make decisions independent of each other. The negotiation process between the buyer and the suppliers is facilitated via the iterative exchange of decision information between the upper and lower levels of the model. The outcome of the sealed-bid auction is determined using an algorithm designed to establish the optimum quantity allocation and delivery time at the upper level and the corresponding optimized production plans at the lower level. The feasibility of the proposed approach is demonstrated via an illustrative example.

Suggested Citation

  • Cheng, Chi-Bin, 2011. "Reverse auction with buyer-supplier negotiation using bi-level distributed programming," European Journal of Operational Research, Elsevier, vol. 211(3), pages 601-611, June.
    • Handle: RePEc:eee:ejores:v:211:y:2011:i:3:p:601-611
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    Cited by:

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    3. Congjun Rao & Yong Zhao & Junjun Zheng & Mark Goh & Cheng Wang, 2017. "Bidding Behavior and Equilibrium Excursion of Uniform Price Auction Mechanism," Asia-Pacific Journal of Operational Research (APJOR), World Scientific Publishing Co. Pte. Ltd., vol. 34(06), pages 1-17, December.
    4. Wang, Chao & Guo, Peijun, 2017. "Behavioral models for first-price sealed-bid auctions with the one-shot decision theory," European Journal of Operational Research, Elsevier, vol. 261(3), pages 994-1000.
    5. Tomáš Hanák & Ivan Marović & Nikša Jajac, 2020. "Challenges of Electronic Reverse Auctions in Construction Industry—A Review," Economies, MDPI, vol. 8(1), pages 1-14, February.
    6. Lafkihi, Mariam & Pan, Shenle & Ballot, Eric, 2019. "Freight transportation service procurement: A literature review and future research opportunities in omnichannel E-commerce," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 125(C), pages 348-365.

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