OPERATIONAL RESEARCH SOCIETY OF NEW ZEALAND
Operational
Research Society of New Zealand & Engineering Science Department
SEMINAR
Room
3.402
School
of Engineering
University
of Auckland
Friday
October 19th, 2:00 pm
An
Auction Mechanism to Support a Multi-attribute eRFQ Process
Lawrence
M. Wein, Sloan School of Management, MIT
We
consider a manufacturer who uses a reverse, or procurement, auction to
determine which
supplier will be awarded a contract. Each bid consists of a price and a
set of non-price
attributes (e.g., quality, lead time). The manufacturer is assumed to
know the parametric
form of the suppliers’ cost functions (in terms of the non-price
attributes), but has
no prior information on the parameter values. We construct a
multi-round open-ascending
auction mechanism, where the manufacturer announces a slightly
different scoring rule
(i.e., a function that ranks the bids in terms of the price and
non-price attributes) in
each round. Via inverse optimization, the manufacturer uses the bids
from the first
several rounds to learn the suppliers’ cost functions, and then in the
final round
chooses a scoring function that attempts to maximize his utility. Under
the assumption
that suppliers submit their myopic best-response bids in the last
round, and do not
distort their bids in the earlier rounds (i.e., they choose their
minimum-cost bid to
achieve any given score), our mechanism indeed maximizes the
manufacturer’s utility
within the open-ascending format. We also discuss several enhancements
that improve the
robustness of our mechanism with respect to the model’s informational
and behavioral
assumptions. Time permitting, the final portion of the talk will
briefly discuss the
revenue management of a make-to-stock queue.
Lawrence M. Wein holds the DEC Leaders for Manufacturing Professorship of Management Science at MIT’s Sloan School of Management. He received a Ph.D. in Operations Research from Stanford University in 1988. His primary research interests are manufacturing and medicine. He is currently the Editor-in-Chief of Operations Research. Professor Wein is visiting Auckland as a 2001 ORSNZ Visiting Lecturer. His lecture on Friday will be followed by refreshments in the Engineering Staff common room on the 12th floor of the School of Engineering.
Auckland Branch Social and Seminar: November 29 2000