“PIN Optimal Auction Vehicle Distribution (ODAV) System: Applying Price Forecasting, Elasticity Estimation, and Genetic Algorithm to Used Vehicle Distribution” by Jie Du, Lili Xie, and Stephan Schroeder (J. D. Power and Associates) .
Automotive manufacturers and their captive channels need to remarket their rental fleet return vehicles and lease return vehicles at auctions throughout the US Realized prices depend on a number of characteristics related to the car (make, model, features and condition), the mix of consumers in each geographic area, and local dynamics of supply and demand. Many of these factors are changing quite rapidly. J. D. Power’s model generates a vehicle distribution plan to maximize the auction net profit by considering the auction price arbitrage across the country, costs associated with the vehicle shipping, and business constraints simultaneously. A number of automotive manufacturers and their captives use the system each day to allocate their incoming return vehicles and realize substantial savings over the previously implemented system.