Reverse Pricing in Supply Chains: An Assessment of Sourcing Strategies

Reverse pricing as a special form of dynamic pricing has become a growing interest in e-commerce. It gives buyers an active role: The price of a transaction is not given by the supplier, but is mainly determined by the buyer's bid. This paper extends the coverage of current reverse pricing models to sourcing. The reason is that sourcing strategies, such as global, local, and multiple sourcing, greatly determine both structure and behavior of supply chains. The contribution is a new coordination mechanism that integrates reverse pricing and sourcing strategies. Our simulation study shows that this mechanism helps reducing order and inventory variances.