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A brokered market with heterogeneous suppliers and consumers

Part of: Operations research and management science Computer system organization

Published online by Cambridge University Press:  14 July 2016

Rhonda Righter
Rhonda Righter*
Affiliation:
Santa Clara University
*
∗Postal address: Department of Operations and Management Information Systems, Santa Clara University, Santa Clara, CA 95053, USA. Email address: [email protected].
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Abstract

We consider a brokered market with heterogeneous suppliers and consumers of identical items or services. Each supplier determines a minimum acceptable price for the items it supplies, based on its costs and target rate of return. The broker begins with a fixed set of items from the suppliers. Customers arrive periodically to the market and offer a bid for an item. If a customer wants more than one item, a set of bids is made. If the broker accepts a bid it must be assigned an item with minimum accceptable price less than or equal to the bid, and the price paid is the bid price. The broker has the option of rejecting a bid. The broker makes acceptance and assignment decisions to maximize the total expected discounted revenue. We show the optimal policy has a simple threshold structure where thresholds can be easily determined by finding the individually optimal policies subject to priorities.

Keywords

Sequential assignmentstochastic dynamic programmingefficient marketsheterogeneous markets

MSC classification

Primary: 90B35: Scheduling theory, deterministic
Secondary: 68M20: Performance evaluation; queueing; scheduling
Type
Research Papers
Information
Journal of Applied Probability , Volume 36 , Issue 2 , June 1999 , pp. 512 - 522
Copyright
Copyright © Applied Probability Trust 1999 

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