Improving bid pricing for humanitarian logistics
International Journal of Physical Distribution & Logistics Management
ISSN: 0960-0035
Article publication date: 12 June 2009
Abstract
Purpose
Humanitarian logistics plays a critical role in the aid response to hunger and disasters worldwide. The US Department of Agriculture (USDA) uses a competitive bidding process to procure P.L. 480 Title II food aid, a $2 billion business annually. This paper describes a mixed‐integer program (MIP) decision tool that mimics the USDA bid approach in order to improve ocean carrier and food supplier bid pricing strategy.
Design/methodology/approach
First, the USDA bid process is detailed and the MIP decision tool is described. Then how the tool is run against historical data to approximate future USDA bid awards is explained, allowing the authors to subsequently advise food supplier and ocean carrier clients of expected price competition and pricing flexibility before they submit bids.
Findings
The MIP decision tool has demonstrated its effectiveness in supporting $8 million in food aid bids. Bidding implications for food aid carriers and suppliers are provided as well as suggestions for additional opportunities for humanitarian logistics research are offered.
Originality/value
Extant literature in procurement offers little practical support for bidder pricing preparation. Additionally, humanitarian logistics is an emerging, under‐researched field, and this paper is the first to address sourcing and distribution of Title II food aid.
Keywords
Citation
Trestrail, J., Paul, J. and Maloni, M. (2009), "Improving bid pricing for humanitarian logistics", International Journal of Physical Distribution & Logistics Management, Vol. 39 No. 5, pp. 428-441. https://doi.org/10.1108/09600030910973751
Publisher
:Emerald Group Publishing Limited
Copyright © 2009, Emerald Group Publishing Limited