Optimal auctions for multi-unit procurement with volume discount bids. (English) Zbl 1169.90376
Summary: In this paper, we design an optimal procurement mechanism for procuring multiple units of a single homogeneous item based on volume discount bids submitted by rational and intelligent suppliers. We develop an elegant auction mechanism, VD-OPT, that minimises the cost to the buyer and satisfies at the same time both Bayesian incentive compatibility (BIC) and interim individual rationality.
MSC:
90B50 | Management decision making, including multiple objectives |