Albers, Sönke and Manfred Krafft

Regeln zur Bestimmung des fast-optimalen Angebotsaufwands

Zeitschrift für Betriebswirtschaft, 70 (10): 1107-1083, (2000).

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Abstract: The selling process in business-to-business transactions is characterized by substantial resources that are invested to gather inquiries, engineer projects, and organize the cooperation of subcontractors. In this manuscript we show that common business practices of separately evaluating each project very often lead to suboptimal decisions. A literature review also reveals that current approaches offer little help to differentiate across more or less profitable and promising projects. We develop and calibrate a model that helps to determine the optimal budget levels that should be spent for gathering inquiries and for winning the contract. This is modelled by the means of a two-stage approach: The expected profit of a potential project is the product of the probability of gathering an inquiry and the expected profit of the inquiry minus the budget for gathering the inquiry (1st stage). The expected profit again is the product of the probability of finally winning the contract and the expected gross margin minus the budget for winning the contract (2nd stage). In a realistic business case, we show that one need not necessarily run complex statistical analyses to arrive at nearly optimal solutions. Rather, the structure of the optimal solution can be simplified to a heuristic that provides near-optimal values.

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