Dutch Reverse Auction
A Dutch reverse auction is a type of RFx that contains a list of items that buyers want to procure. In this auction, the price of the item rises after fixed intervals until a reserved price is reached. Before the reserved price is reached, if a supplier places a bid for the item, it is allocated to the supplier and the item closes for bidding.
In this auction, the buyer specifies a starting price, price change value, time interval between price changes, and the reserved price.
The auction opens with the first item with a specified start price and increases by the price change value (amount or percentage) after a fixed interval. The start price keeps on increasing until any supplier places a bid or the start price reaches the reserved price. After the bidding is closed for the item it moves to another item sequentially.
Auction is closed when the bidding for all items is completed.
Auction flow
The following table displays configuration settings for a Dutch reverse auction.| # | Item | Minimum quantity | Start price | Reserved price | Price change | Price change time | Partial quantity enabled |
|---|---|---|---|---|---|---|---|
| 1 | Processor | 100 | $50 | $150 | $10 | 3 mins | No |
| 2 | Hard disk | 150 | $20 | $60 | $5 | 3 mins | Yes |
- If no suppliers bid on the item for a period of 3 minutes, the price is increased by $ 10.
- If no suppliers bid for the item even when the price is $ 150, the item closes for bidding.
- Since partial quantity is not enabled, suppliers must bid for all 100 units.
- When a supplier places a bid, the item is awarded to the supplier.
- If no suppliers bid on the item for a period of 3 minutes, the price is increased by $ 5.
- If no suppliers bid for the item even when the price is $ 60, the item closes for bidding.
- Since partial quantity is enabled, suppliers can place a bid on any number of available units.
- When a supplier places a bid, the quantity bid is allotted to the supplier.