Level 4: Optimization

When it fits

The buyer or seller needs to determine the optimal mix of products or obligations while meeting production, operating or delivery constraints.

How it works

• The auction proceeds through a series of rounds, with an announced price for each product.
• Bidders submit packages specifying the quantities they want together.
• An optimization step selects a feasible combination of packages as Provisional Winning Bids—the current proposed awards.
• Prices and Provisional Winning Bids can change between rounds under the published rules.
• The final allocation awards complete packages under those rules.

What to define before bidding

• Product specifications and delivery obligations.
• Quantity units, lot sizes and increments.
• Permitted packages and alternative bids.
• Available quantities and any production or delivery constraints.
• The optimization objective and bidder eligibility.
• Starting prices, round rules, feedback, allocation and payment rules.

Advantages

• Lets bidders express the value of combinations.
• Keeps the quantities within each winning package together.
• Selects compatible packages across bidders while respecting the defined constraints.