Abstract
We consider the situation in which a buyer has the option to buy a whole project or to buy a number of separate lots from different suppliers that together constitute the project. Buying a whole project reduces the coordination and management costs. First we show that buying a whole project (the bundle) might increase the project costs. Then we investigate this possible increase in project costs by analytical means. This analysis proves the increase in costs. Finally we visualize the size of the cost increase by simulation techniques. In the simulated cases, buying in separate lots turns out to save up to 10 percent of the total purchasing price. This leads to the conclusion that there is a positive effect associated with splitting into lots, we call it the splitting value.
| Original language | Undefined |
|---|---|
| Title of host publication | Proceedings of the 16th Annual IPSERA Conference - Practice Makes Perfect |
| Pages | 461-468 |
| Number of pages | 10 |
| Publication status | Published - 1 Apr 2008 |
| Event | 16th Annual IPSERA Conference 2007: Practice Makes Perfect - Hilton Bath City, Bath, United Kingdom Duration: 1 Apr 2007 → 4 Apr 2007 Conference number: 16 |
Conference
| Conference | 16th Annual IPSERA Conference 2007 |
|---|---|
| Country/Territory | United Kingdom |
| City | Bath |
| Period | 1/04/07 → 4/04/07 |
Keywords
- METIS-246710
- IR-101538
- lots
- Bundling
- purchasing decisions
- splitting value