Strategic Sourcing in Procurement

Lluis Bru and Daniel Cardona

No 82, DEA Working Papers from Universitat de les Illes Balears, Departament d'Economía Aplicada

Abstract: In this paper, we study how a big buyer owing many smallish units may coordinate procurement demands in order to obtain a low price. We show that when the capacity of the big buyer is relatively large, the optimal policy consists on procuring (part of) its requirements through lots. The optimal number and sizes of these lots would depend on the number of potential suppliers as well as the total requirements of this buyer; and in general, a single lot is not optimal. Moreover, we also show that it may be optimal to demand some requirements through smallish units.

Keywords: Procurement policy; Auctions; Buyer groups; Single-sourcing; Lots (search for similar items in EconPapers)
JEL-codes: C72 D44 L14 (search for similar items in EconPapers)
Date: 2016
New Economics Papers: this item is included in nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:ubi:deawps:82

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