Mechanism design for green, truthful procurement auctions

Auction based mechanisms have become popular in industrial procurement settings. These mechanisms minimize the cost of procurement and at the same time achieve desirable properties such as truthful bidding by the suppliers. In this paper, we investigate the design of truthful procurement auctions taking into account an additional important issue namely carbon emissions. In particular, we focus on the following procurement problem: A buyer wishes to source multiple units of a homogeneous item from several competing suppliers who offer volume discount bids and who also provide emission curves that specify the cost of emissions as a function of volume of supply. We assume that emission curves are reported truthfully since that information is easily verifiable through standard sources. First we formulate the volume discount procurement auction problem with emission constraints under the assumption that the suppliers are honest (that is they report production costs truthfully). Next we describe a mechanism design formulation for green procurement with strategic suppliers. Our numerical experimentation shows that emission constraints can significantly alter sourcing decisions and affect the procurement costs dramatically. To the best of our knowledge, this is the first effort in explicitly taking into account carbon emissions in planning procurement auctions.

Industrial supply and distribution in Puerto Rico.

On cover: Prepared by the Economic Development Administration of the Commonwealth of Puerto Rico for the Small Business Administration, Washington.

Missile and aircraft procurement management.

Mode of access: Internet.

Adoption of electronic commerce tools in business procurement:enhanced buying center structure and processes

Modern procurement is being shifted from paper-based, people-intensive buying systems toward electronic-based purchase procedures that rely on Internet communications and Web-enhanced buying tools. Develops a typology of e-commerce tools that have come to characterize cutting-edge industrial procurement. E-commerce aspects of purchasing are organized into communication and transaction tools that encompass both internal and external buying activities. Further, a model of the impact of e-commerce on the structure and processes of an organization's buying center is developed. The impact of the changing buying center on procurement outcomes in terms of efficiency and effectiveness is also analyzed. Finally, implications for business-to-business marketers and researchers are discussed.