Optimization Decision Method for Procuring Divisible Goods

Abstract

The procurement decision problem of divisible goods is investigated, and an optimization decision method for procuring a kind of divisible goods (such as coal, oil, electricity, gas, etc.) is presented based on multi-attribute auction. Firstly, the procurement decision problem of divisible goods is converted into a multi-attribute auction of divisible goods. Correspondingly, several important assumptions of multi-attribute procurement auction are given, and the buyer's utility function and the supplier's utility function are defined. Secondly, the scoring rules and bidding rules are given. And aiming at maximizing the buyer's expected utility, an optimization decision model of selecting the suppliers in multi-attribute auction is established. By solving this model, the optimal suppliers and the optimal allocation strategies are obtained. Thirdly, the suppliers’ optimal bidding strategies are discussed, and the feasibility of multi-attribute auction mechanism is proved. Lastly, a multi-attribute auction example about the electric coal procurement is given to demonstrate the availability and rationality of our procurement decision method.

Keywords

• Divisible goods procurement
• Optimization decision model
• Multi-attribute auction
• Electric coal procurement