Modeling Purchase Benefit and Associated Risk from e-marketplace

Due to globalization of business and flourishing of various forms of e-marketplaces, organizations are coming out from the arm-length partnership of supply chain model and rely more on open architecture e-procurement model. If the purchaser depends more and more on e-marketplace, he is entering more and more in the risk zone though he is availing transaction benefit, because probability of getting item from the open market is gradually decreasing as the order-size increased. Hence, there should be some optimal point beyond which procurement through e-marketplace becomes unviable for the organization. This cut-off point has been modeled using average market availability of items (λ) in Poisson distribution. This model will help the organization to identify the particular cut-off level for e-procurement in a given market situation.