Template-Type: ReDIF-Paper 1.0 Author-Name: Kaymak, U. Author-Name-Last: Kaymak Author-Name-First: Uzay Author-Person: pka115 Title: A Lotting Method for Electronic Reverse Auctions Abstract: 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 thesuppliers, 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. Creation-Date: 2003-05-15 File-URL: https://repub.eur.nl/pub/337/ERS-2003-042-LIS.pdf File-Format: application/pdf Series: RePEc:ems:eureri Number: ERS-2003-042-LIS Classification-JEL: D44, M, M11, R4 Keywords: e-commerce, e-procurement, hierarchical clustering, lotting, reverse auctions Handle: RePEc:ems:eureri:337