Bidding decision support

NTP attempts to simplify the clients bidding problem by aiding them in systematically evaluating their win probability given a particular bid with a particular buyer. The decision support software assumes that if a bid is submitted, the supplier has sufficient capacity to supply the buyer s entire order and that the order utilizes only a small fraction of the supplier s capacity, i.e., NTP does not incorporate any supply constraints. Rather the software focuses on determining the optimal range of prices from which the supplier should submit a bid, with each price corresponding to a different win probability. 

The key decisions that supported this transportation auction include the description of the ending round, the training of suppliers as they put together bids, and the process of selection of winning carriers between rounds. 

It is a complex problem for the supplier to decide what offer to make to a particular customer. While the supplier s decision problem is theoretically simple, i.e., to determine the price offer that will maximize the expected contribution per unit = Pr(winning the bid) (unit contribution), the difficulty lies in accurately predicting the probability of winning. Except in the case of commodity products, suppliers are almost never evaluated on price alone. Rather, a list of supplier characteristics, such as size, geographic location, whether or not the buyer has done business with the supplier before, etc., are taken into account in conjunction with price to determine which supplier is best suited for a buyer. In order to make a bidder support tool operational, a supplier must be able to estimate and maintain a parameterized win probability equation that predicts win probability as a function of the characteristics of the offer itself, the customer and the market. 

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