Modelling Uncertainty in Competitive Bidding

Melanie Kreye, Yee Mey Goh, Linda B. Newnes

Research output: Chapter in Book/Report/Conference proceedingArticle in proceedingsResearchpeer-review

Abstract

Due to the current market development of servitisation, manufacturing companies are required to compete through the provision of services as opposed to just products. For such companies, the shift towards being a service provider often means they have to bid for service contracts, sometimes competitively. In the context of competitive bidding, the decision makers face various uncertainties that influence their decision. Ignoring these uncertainties or their influences can result in problems such as the generation of too little profit or even a loss or the exposure to financial risks. Raising the decision maker’s awareness of the uncertainties can provide valuable information to assist in the decision-making process. The research presented in this paper presents an approach to modeling the uncertainties at the competitive bidding stage for long-life, high-value service contracts. The aim of this research is to provide decision makers with a decision matrix which illustrates the probability of winning the service contract and the probability of making a profit. The framework utilized for identifying the uncertainties and a layered approach for analyzing these uncertainties is described. These are then applied to a case study where the modeling approaches and data gathering methods are explained and the results are displayed via the decision matrix.
Original languageEnglish
Title of host publicationProceedings of the ASME 2012 International Design Engineering Technical Conferences & Computers and Information in Engineering Conference
Number of pages11
PublisherAmerican Society of Mechanical Engineers
Publication date2012
Article numberDETC2012-70841
Publication statusPublished - 2012
Externally publishedYes
EventASME 2012 International Design Engineering Technical Conferences & Computers and Information in Engineering Conference IDETC/CIE 2012 - Chicago, IL, United States
Duration: 12 Aug 201215 Aug 2012

Conference

ConferenceASME 2012 International Design Engineering Technical Conferences & Computers and Information in Engineering Conference IDETC/CIE 2012
CountryUnited States
CityChicago, IL
Period12/08/201215/08/2012

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