A Heuristic Lotting Method for Electronic Reverse Auctions

  • Uzay Kaymak
  • Jean Paul Verkade
  • Hubert A. B. te Braake
Conference paper
Part of the Lecture Notes in Computer Science book series (LNCS, volume 2869)


An increasing number of commercial companies are using online reverse auctions for their sourcing activities. In reverse auctions, multiple suppliers bid for a contract from a buyer for selling goods and/or services. Usually, the buyer has to procure multiple items, which are typically divided into lots for auctioning purposes. By steering the composition of the lots, a buyer can increase the attractiveness of its lots for the suppliers, which can then make more competitive offers, leading to larger savings for the procuring party. In this paper, a clustering-based heuristic lotting method is proposed for reverse auctions. Agglomerative clustering is used for determining the items that will be put in the same lot. A suitable metric is defined, which allows the procurer to incorporate various approaches to lotting. The proposed lotting method has been tested for the procurement activities of a consumer packaged goods company. The results indicate that the proposed strategy leads to 2–3% savings, while the procurement experts confirm that the lots determined by the proposed method are acceptable given the procurement goals.


Combinatorial Auction Online Auction Reverse Auction Linkage Algorithm Hierarchical Cluster Technique 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


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Copyright information

© Springer-Verlag Berlin Heidelberg 2003

Authors and Affiliations

  • Uzay Kaymak
    • 1
  • Jean Paul Verkade
    • 1
  • Hubert A. B. te Braake
    • 1
  1. 1.Faculty of EconomicsErasmus University RotterdamRotterdamThe Netherlands

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