Dutch Forward Auction

A Dutch forward auction is a type of RFx that contains a list of items that buyers want to sell. In this auction, the price of the item falls after fixed intervals until a reserved price is reached. Before the reserved price is reached, if a supplier places a bid for the item, it is allocated to the supplier and the item closes for bidding.

In this auction, the buyer specifies a starting price, price change value, time interval between price changes, and the reserved price.

The auction opens with the first item with a specified start price and decreases by the price change value (amount or percentage) after a fixed interval. The start price decreases until any supplier places a bid or the start price reaches the reserved price. After the bidding is closed for the item it moves to another item sequentially.

Auction is closed when the bidding for all items is completed.

Auction flow

The following table displays configuration settings for a Dutch forward auction.

Table 1. Example for Dutch Forward Auction
#	Item	Minimum quantity	Start price	Reserved price	Price change	Price change time	Partial quantity enabled
1	Processor	100	$150	$100	$10	3 mins	No
2	Hard disk	150	$120	$90	$5	3 mins	Yes

At the scheduled time of bidding, the first item in the auction - Processor - is opened for bidding at $ 150.

If no suppliers bid on the item for a period of 3 minutes, the price is decreased by $ 10.
If no suppliers bid for the item at $140, the price is further decreased by $10. If no suppliers bid till price is $100, item closes for bidding.
Since partial quantity is not enabled, suppliers must bid for all 100 units.
When a supplier places a bid, the item is awarded to the supplier.

After the Processor item closes for bidding, the Hard disk item is opened for bidding.

If no suppliers bid for the item for a period of 3 minutes, the price is decreased by $ 5.
If no suppliers bid for the item at 115, the price is further decreased by $ 5. If no suppliers bid till price is $ 90, item closes for bidding.
Since partial quantity is enabled, suppliers can place a bid on any number of available units.
When a supplier places a bid, the quantity of items that the supplier has bid for, is allotted to the supplier.