Buying bundles: the effects of bundle attributes on the value of bundling

We consider the situation in which a buyer has to find the optimal degree of bundling for buying goods and services. From a review of the literature we develop attributes associated with bundling. Each of these attributes has an effect on the value of a bundle. Combined, the attributes determine the value of a bundle. We describe how the various attributes of a bundle contribute to the value of a bundle given the context of the buying situation. Based on interviews, a further analysis of bundle attributes and their effects on the bundle value is provided. The results of this analysis can be used to assist in finding the optimal degree of bundling

An analysis of some mistakes, miracles and myths in supplier selection

This paper analyzes some consequences of formal methods and procedures for supplier selection. It argues that many mistakes and miracles may occur in frequently used procedures. Practical examples are given. In the analysis it turns out that preventing these unwanted effects from occurring may be tackled by methodological improvements. Some examples and guidelines for these are given as well. But another important point lies in the perspectives of the actors in supplier selection: governments and industry policy makers, purchasers, suppliers and (management) researchers. The analysis shows that these different actors often operate from quite different and sometimes conflicting attitudes, assumptions and principles. On the one hand this analysis leads to the conclusion that using some sort of formal approach for supplier selection may be necessary. On the other hand it clarifies the criticism on such an approach and the difficulties associated with its use. The paper concludes with recommendations and implications for policy makers, researchers, and practitioners

Incorporating supplier’s learning in buying bundles

We consider the situation in which a purchaser can either buy a large quantity at the same time or sequentially in a number of smaller lots. Buying in a number of smaller lots obviously increases transaction costs. But buying in smaller lots provides the opportunity to the supplier to learn by discovering the true costs of supplying every lot. This is especially interesting for purchasers (and suppliers) operating in markets where little is known about the true costs of supply or where small margins require very accurate estimates. Using optimal learning modeling we analyze the effect of incorporating learning possibilities for suppliers into the bundling decision of the purchasing manager. We show that incorporating learning into bundles can have a significant effect on the total cost of acquisition. These results show purchasing managers the importance of an underestimated effect in bundling decisions: the learning effec

The splitting value: analyzing the value of buying in separate lots

We consider the situation in which a buyer has the option to buy a whole project or to buy a number of separate lots from different suppliers that together constitute the project. Buying a whole project reduces the coordination and management costs. First we show that buying a whole project (the bundle) might increase the project costs. Then we investigate this possible increase in project costs by analytical means. This analysis proves the increase in costs. Finally we visualize the size of the cost increase by simulation techniques. In the simulated cases, buying in separate lots turns out to save up to 10 percent of the total purchasing price. This leads to the conclusion that there is a positive effect associated with splitting into lots, we call it the splitting value