Integrating Side Payments into Collaborative Planning for the Distributed Multi-level Unconstrained Lot Sizing Problem

Abstract

Collaborative planning mechanisms coordinate the decisions of multiple, autonomous, and self-interested decisions makers under asymmetric information. The approach proposed in this paper extends collaborative planning for the distributed multi-level uncapacitated lot-sizing problem by integrating compensation payments. Compensation or side payments provide an incentive for individual decision makers to accept inferior local solutions that may direct the search to superior global solutions for a coalition of decision makers. The approach uses neighborhood search, voting-based solution acceptance criteria and takes into account varying side payments which are negotiated. Based on 272 benchmark instances the computational study shows that the presented approach is able to achieve substantial progress compared to earlier methods. It therefore is beneficial to incorporate side payments into negotiation processes based on collaborative search.

Coordination mechanisms with mathematical programming models for decentralized decision-making: a literature review

“…By extending Vickrey-Clarke-Groves (VCG) to a Continuous Double Auction (CDA) so that agents are encouraged to honestly report their capabilities and costs for potential penalties (Dash et al, 2007). In other cases, with a finite solutions modelling approach (Distributed Multi-Level Uncapacitated Lot-Sizing Problem)(DMLULSP) they are voted and applied meta-heuristic neighbourhood search (Homberger et al, 2015) to find a better solution. These votes have also been evaluated by rules Borda maximum voting rule along with meta-heuristics ant colony or pheromone (Homberger et al, 2011(Homberger et al, , 2010 or evolutionary algorithms (Homberger, 2011), or with other voting rules Metropolis acceptance criterion and the meta-heuristic simulated annealing (Homberger, 2010) or with different rules Rawls or min-max voting rule and the meta-heuristic ant colony or pheromone (Buer et al, 2013).…”

Tactical production planning for physical and financial flows of supply chain in a multi-site context

“…no decision maker is authorized to make production decisions for the entire supply chain. Distributed (Decentralized) approaches are developed to fill this gap in MLLP context, for instance, in the recent work of Homberger (2010), Buer et al (2013) and Homberger et al (2015) with different negotiation mechanisms.…”

A coordination mechanism for capacitated lot-sizing in non-hierarchical n-tier supply chains

“…Further coordination mechanisms that are able to deal with distributed lot-sizing problems in n-tier SC's are introduced by [7], [16]- [20]. In these approaches, a mediator proposes an contract which represents an encoded solution.…”

“…For example, an agent is responsible to produce some products on the first tier and on the third tier but none on the second tier. The allocation of the savings to the agents achieved by CP which is subject of [7], for example, is not studied in this paper, however.…”