Proceedings of The 13th International Conference on Management, Economics and Humanities
Multi-Asset-Selling with Holding Costs and Discounting
Israel David and Matan Shnaiderman
In this work we examine the Operations Research problem of multi-asset-selling problem when holding costs are added. In this problem a seller has at hand n identical units to be sold one at a time to bidders. Bidders arrive sequentially in discrete time, each presenting a random bid amount, drawn from a known distribution function. The arrival process is an in_nite horizon. Under these conditions an incentive to sell early stems from holding costs which are charged against unsold units. An incentive to sell late is the hope for a larger bid. Discounting of future revenues (as well as of future costs) also applies. The seller seeks optimal decision rules to maximize the total expected net pro_t from the sale of the n assets (items). We formulate these optimal accepting-rejecting rules (policies) and show how to compute their parameters. Monotonicity and concavity results are obtained. We then turn to optimal lot- sizing: the optimal number of items to purchase in the _rst place to sell to coming bidders. Explicit results for a number of bid distributions are presented that illustrate additional insights and quantify the impact of our results.
Keywords: dynamic programming, best choice, asset selling, optimal stopping.