Multiple Sourcing and Procurement Process Selection with Bidding Events

We examine the procurement process selection problem of a large industrial buyer who employs reverse auctions for awarding procurement contracts. We contrast two classes of commonly used strategies under multiple sourcing; namely, single-stage reverse auctions, and two-stage processes where price-quantity adjustments between the buyer and the suppliers follow a first-stage reverse auction and present insights on the conditions under which each class is preferable for the buyer.