A BIDDING DECISION MODEL FOR SMEs

Open Access
Author:
Lin, Chen-Hsueh
Graduate Program:
Industrial Engineering
Degree:
Master of Science
Document Type:
Master Thesis
Date of Defense:
October 29, 2016
Committee Members:
  • VITTALDAS PRABHU, Thesis Advisor
  • A. RAVI RAVINDRAN, Committee Member
  • JANIS TERPENNY, Committee Member
Keywords:
  • Competitive Bidding
  • Small and Medium Enterprise (SME)
  • Delay in Payment
  • Triangular Distribution
Abstract:
A bidding decision model describing the bidding patterns of competitors by triangular distribution is developed for small and medium enterprises (SMEs). The model does not rely on past bidding data of competitors; instead, a decision maker’s understanding of the competitors is represented by production costs and desire rates of competitors, which are then used as parameters of triangular distribution. The model integrates production management and cash flow management over multiple periods. It is nonlinear and not smooth, so a heuristic solving process is developed with the Excel evolutionary solver. A numerical example with 36 projects for bid over six months is built to test the effectiveness of the solving process. Over the course of 68 runs, the expected profit is increased to $41,857 when considering all constraints; while $82,500 is the optimal expected profit when considering no constraints at all.