Mars Incorporated: Online Procurement

Mars Inc., one of the world’s largest privately owned businesses, purchased over $4 billion of
materials annually and was aware that many major firms were achieving savings of around five
per cent through the use of online procurement auctions. The vice-president for Business
Solutions at Mars wondered whether an online auction could be designed that would meet the
special needs of the Mars company while enabling Mars to achieve the savings necessary to
allow the company to prosper and grow in its highly competitive markets.
Assignment
Please prepare a brief write-up that addresses the questions below. The write-ups will be
evaluated on their content and presentation, including logic, organization, grammar, and
spelling. Please combine all files into a single document and submit it to the Blackboard
Dropbox by the due date indicated below.
Questions
1. What are the basic types of auctions? [1 point]
2. What features of the proposed Mars’ auction present implementation challenges? [1
point]
3. Using a linear programming framework and the data from case Exhibit 1, formulate and
solve the problem of finding the cost-minimizing set of bids that meet Mars’ business
requirements and determines the winning suppliers. (Ignore the requirement that first
bid wins in the case of ties.) [5 points]
4. How can the requirement that first bid wins in the case of ties be met within the
optimization framework? [1 point]
5. Could a Mars-type combinatorial auction be operated without the use of optimization?
[1 point]