Cooperative aggregate production planning: a game theory approach

Abstract

Production costs in general, and workforce and inventory costs in particular, constitute a large fraction of the operating costs of many manufacturing plants. We introduce cooperative aggregate production planning as a way to decrease these costs. That is, when production planning of two or more facilities (plants) is integrated, they can interchange workforce and products inventory; thus, their product demands can be satisfied at lower cost. This paper quantifies the cost saving and synergy of different coalitions of production plants by a new linear model for cooperative aggregate planning problem. The developed approach is explicated with a numerical example in which inventory and workforce levels of different coalitions of facilities are evaluated. Afterward, a key question would be how the cost saving of a coalition should be divided among members. We tackle the problem using different methods of cooperative game theory. These methods are implemented in the numerical example to gain an insight into properties of the corresponding game results.

Model to reduce the cost of production in a bottling company using the EOQ, Linear Programming and Aggregate Planning

“…Mainly, the tool allowed to reduce storage costs and increase its capacity. Thus, it is also demonstrated by [10], who, using a tool based on aggregate planning, called cooperative aggregate production planning, managed to reduce production costs thanks to labor and inventory costs. Besides, [11] uses aggregate planning in a fish canning company.…”

Collaborative airline revenue sharing game with grey demand data

“…Therefore, a theoretically grounded solution background was given to examine this question. In this context, the cooperative game theory has one of the most appropriate and well-known solution techniques (Frisk et al 2010 ; Hafezalkotob and Makui 2015 ; Hafezalkotob et al 2018 , 2019 ). Even though there are some cooperative game theory solution concepts, the Shapley value, equal revenue method (ERM), Nucleolus, and minimax Core methods were used.…”

“…The purpose of cooperative game theoretical solution concepts is to assign a fair revenue sharing amount among the players. In this regard, various cooperative game theoretical methods have been suggested in the scientific literature (Lozano et al 2013 ; Hafezalkotob et al 2019 ). For the imputation of the satisfaction of a coaliton is expressed as .…”