Title: A model and procedure for competitive bidding under resource constraints

Authors: Haitao Li, Keith Womer

Addresses: Sorrell College of Business, Troy University, 136 Catoma Street, Room 210, Montgomery, AL 36103, USA. ' College of Business Administration, University of Missouri, One University Blvd, St Louis, MO 63121-4400, USA

Abstract: Accurate cost estimates for an incoming order are critical in formulating the optimal bidding strategy. When a firm is approaching its resource capacity, adding a new job into the system in the short-run may cause violations of the due date requirements, thus penalty costs arise. Failure to obtain an accurate estimate of the penalty costs often leads to sub-optimal bids. In this paper, we propose a two-stage model and procedure for optimal bidding under explicit resource constraints. The computational results indicate that our model and solution approach is both effective and efficient for the proposed problem.

Keywords: scheduling; total weighted tardiness; flexible job shops; general temporal constraints; competitive bidding; tabu search; operational research; cost estimation; resource constraints; optimal bidding.

DOI: 10.1504/IJOR.2007.014174

International Journal of Operational Research, 2007 Vol.2 No.4, pp.452 - 480

Published online: 24 Jun 2007 *

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