Bid markup selection models by use of multiple criteria

Abstract

Multiple attribute decision modeling is proposed for determining the most preferred bid markup in a competitive bidding situation. In this note, a previously proposed model is extended by introducing two new bidding criteria, called the conditional positive profit and the expected positive profit ratios, respectively. Three two-criteria decision models and a single criteria decision models using the newly introduced criteria are proposed to determine the bidder's most preferred markup level. The simple additive weighting method and the weighting product method are used to solve these models. Two numerical examples are used to illustrate the different rankings that are obtained when different models and solution methods are used. The results demonstrate that the bidder's preference over the set of bidding criteria has a significant effect on the selection of the bid markup.