Minimum Purchase Price Research Articles

Payoff uncertainty, bargaining power, and the strategic sequencing of bilateral negotiations

This article investigates the sequencing choice of a buyer who negotiates with the sellers of two complementary objects with uncertain payoffs. The possibility of inefficient trade may generate strict sequencing preference. The buyer begins with the weaker seller if the sellers have diverse bargaining powers and with the stronger one if both sellers are strong bargainers. This sequencing is likely to increase the social surplus. Moreover, the buyer may find it optimal to raise her own acquisition cost by committing to a minimum purchase price or outsourcing. The first‐ and second‐mover advantages for the sellers are also identified.

Planning models for software reliability and cost

This paper presents modeling frameworks for distributing development effort among software components to facilitate cost-effective progress toward a system reliability goal. Emphasis on components means that the frameworks can be used, for example, in cleanroom processes and to set certification criteria. The approach, based on reliability allocation, uses the operational profile to quantify the usage environment and a utilization matrix to link usage with system structure. Two approaches for reliability and cost planning are introduced: Reliability-Constrained Cost-Minimization (RCCM) and Budget-Constrained Reliability-Maximization (BCRM). Efficient solutions are presented corresponding to three general functions for measuring cost-to-attain failure intensity. One of the functions is shown to be a generalization of the basic COCOMO form. Planning within budget, adaptation for other cost functions and validation issues are also discussed. Analysis capabilities are illustrated using a software system consisting of 26 developed modules and one procured module. The example also illustrates how to specify a reliability certification level, and minimum purchase price, for the procured module.