On optimal bidding in sequential procurement auctions

a b s t r a c t We investigate the problem of optimal bidding for a firm that in each period procures items to meet a random demand by participating in a finite sequence of auctions. We develop a new model for a firm where its item valuation derives from the sale of the acquired items via their demand distribution, sale price, acquisition cost, salvage value and lost sales. We establish monotonicity properties for the value function and the optimal dynamic bid strategy and we present computations

On optimal bidding in sequential procurement auctions

We investigate the problem of optimal bidding for a firm that in each period procures items to meet a random demand by participating in a finite sequence of auctions. We develop a new model for a firm where its item valuation derives from the sale of the acquired items via their demand distribution, sale price, acquisition cost, salvage value and lost sales. We establish monotonicity properties for the value function and the optimal dynamic bid strategy and we present computations. © 2012 Elsevier B.V. All rights reserved

Optimal Bidding in Sequential Procurement Auctions

Abstract We consider the problem of a firm that in each period procures items by participating in auctions and then it sells the acquired items by the end of the period, where any unsold items are salvaged. The objective of the firm is to have a bidding policy that maximizes the expected value of its profit over N auctions. In this model the firm's valuations derive from the resale of acquired items via their sale price, acquisition cost, salvage value and shortage penalties. Under sensible assumptions, it is shown that the optimal bid is a decreasing function of the number of remaining auctions, an increasing function of the number of other auction participants and a decreasing function of the number of items at hand. We also establish monotonicity properties for the value function and we present computations

On bidding for a fixed number of items in a sequence of auctions

We consider the problem of a firm ( the buyer ) that must acquire a fixed number (L) of items. The buyer can acquire these items either at a fixed buy-it-now price in the open market or by participating in a sequence of N \u3e L auctions. The objective of the buyer is to minimize his expected total cost for acquiring all L items. We model this problem as a Markov Decision Process and establish monotonicity properties for the optimal value function and the optimal bidding strategies. © 2012 Elsevier B.V. All rights reserved