Optimal Bidding in Sequential Procurement Auctions
نویسندگان
چکیده
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.
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