An auction methodology wherein individual demands are bid in lots and an
aggregation of several lots is then run as an individual lot to determine
if the buyer can attract a lower price offering from bidders by selecting
to award the total volume of all of the individual lots to one bidder. A
bidder-specific transformation factor for the aggregate lot is computed
by combining selected transformed values (one for each lot) that take
into account that bidder's price offerings for individual lots and the
buyer-specified transformation factors for that bidder. Each bidder is
then invited to bid a discount percentage for the aggregate lot. This
discount percentage is then used along with the bidder-specific
transformation factor to generate that bidder's transformed value for the
aggregate lot. The bidder with the lowest transformed value for the
aggregate lot may be selected as the winning bidder. The combination of
bid transformation and lot aggregation results in obtaining an optimum
bid for the buyer because it allows the buyer to accurately evaluate the
bids received for the aggregate lot.