Rule relaxation setting

A Purchaser has the ability to apply a relaxation rule for both the Limit award and Limit winners rule.

The relaxation can be applied in three ways:

1. No relaxation

Enforce rule even if it results in an infeasible outcome.

2. Partial relaxation

Partially relax the rule if enforcement is infeasible or penalty costs less than cost of enforcing the rule.

• Partial - Infeasible
  • Rule states there must be min of 5 winners
  • We only have bids from 4 bidders
  • Rule gets partially relaxed because full enforcement is infeasible regardless of penalty size

• Partial - Incentive to relax
  • Rule states there must be min of 5 winners with a penalty of 10K
  • We have sufficient bid coverage but adding the 5th bidder results in an increase in cost of 20K
  • Relaxing from 5 winners to 4 winners will incur 20% of the penalty or 2k
  • Rule gets partially relaxed because penalty of 2k is less than 20K cost of enforcement

3. Full relaxation

Fully relax the rule if enforcement is infeasible or penalty costs less than cost of enforcing the rule. The Solver will turn off the relaxation rule if enforcement would otherwise result in an infeasible outcome or cost of penalty is less than the cost of enforcement

• Full - Infeasible
  • Rule states there must be min of 5 winners
  • We only have bids from 4 bidders
  • Rule gets fully relaxed because full enforcement is infeasible
  • Full relaxation means that the system will incur the same penalty whether they award 1 or 4 winners

• Full - Incentive to relax
  • Rule states there must be min of 5 winners with a penalty of 10K
  • We have sufficient bid coverage but adding the 5th bidder results in an increase in cost of 20K
  • Relaxing from 5 winners to 4 winners will require the rule to be relaxed with full relaxation costing 10k
  • Rule gets fully relaxed because penalty of 10k is less than 20K cost of enforcement

Relaxation penalty

When a Purchaser opts for partial or full relaxation, they are required to specify a penalty associated with this relaxation. A penalty allows the user to reason about the cost of enforcement.

• Cost of enforcement refers to the increase in cost due to the rule being present in the optimization problem
• A large penalty will mean that the buyer wants to see it enforced
• A small penalty will mean that the buyer is less concerned with it being enforced
• Penalty sizes should be scaled based on the expected cost of an event
  • A penalty of $100 on an event worth $10M will almost certainly be relaxed
  • A penalty of $1M on an event worth $200K will almost certainly be enforced

The rule relaxation is clearly stated in the pre-evaluation summary copy of the rule. After the evaluation process, a post-evaluation summary copy of the rule will detail the total penalty value applied in the case of partial or full relaxation.

The total penalty value will be prominently displayed under the Penalty column in the scenarios list page for easy reference and tracking.