Better, Faster, Cheaper: a Multi-attribute Supply Chain Auction Mechanism Better, Faster, Cheaper: a Multi-attribute Supply Chain Auction Mechanism *

The use of reverse auctions for procurement activities has grown tremendously over the last several years. The majority of these auctions use a single dimension (price) format while providing constraints on non-price attributes such as quality and lead time. In this research, we present an auction mechanism for a buyer whose utility function is known and dependent on three attributes: price, quality, and lead time. The buyer favors higher quality, faster delivery and lower price. We explore, experimentally, the performance of this multi-attribute auction mechanism as compared to the best, price-only auction mechanism. In comparison with the price-only auction, we find that our mechanism design is effective in increasing both buyer utility and bidder (supplier) profits. (Auctions; Experimental Economics; Supply Chain Management )