In this chapter the authors have attempted to provide readers with a clearer under- standing of online auctions, auction theory, the statistical formulations that enable auctions to function effectively, and how supply managers can use auctions to help their organizations achieve earnings targets more effectively. In addition to the sig- nificant managerial implications, this chapter has provided important avenues for future research. There is a need to develop training and continuing education pro- grams to teach supply managers about how to use online auctions to minimize risk within their supply chains. In turn, this research illustrates the need to develop a better understanding of how businesses can better use real-time auction prices to facilitate strategic planning.
With the proliferation of the Internet and electronic marketplaces, the presence and use of online auctions are expected to increase. However, the decision support buyers and sellers need to use these supply channels effectively and efficiently are still being developed. Therefore, for a supply chain manager, understanding and modeling the buyer’s and seller’s bidding behavior are key to understanding how auctions work and if and how they may be of benefit. This research presents a general method for modeling a buyer’s and seller’s bidding behavior using probability of trade functions.
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Chapter 8
Analytical Models for Integrating Supplier
Selection and Inventory Decisions
Burcu B. Keskin
Contents