A generic coordination mechanism for lot-sizing in supply chains

TLDR: Experimental results show that the proposed mechanism is effective to determine fair cost distributions in a supply chain.

Abstract: A new generic mechanism to coordinate decentral planning of a group of independent and self-interested decision makers, who are searching for an agreeable contract regarding multiple interdependent issues, in the case of asymmetric information is presented. The basic idea of the mechanism is that the group members cooperatively carry out an evolutionary search in the contract space. Therefore the (1,?)-selection procedure, which is used in many evolutionary strategies, is combined with the Borda maximin voting rule, which has been applied successfully in group decision making. The proposed mechanism is realized, applied and evaluated for production coordination in a supply chain. A decentralized variant of the multi-level uncapacitated lot-sizing problem (MLULSP) is taken as the production model. For the evaluation 95 problem instances are generated based on MLULSP instances taken from the literature, with problem sizes varying from 5 to 500 items, from 12 to 52 periods. Experimental results show that the proposed mechanism is effective to determine fair cost distributions.