Optimal Offer Proposal Policy in an Integrated Supply Chain Management Environment

Abstract

In this work, we present a novel approach that provides decision support in making optimal offer proposals during the negotiation process between customers and suppliers that takes place in chemical industry supply chains (SC). The proposed approach takes into account the tradeoff between the quality of the offers made to customers, i.e., the level of satisfaction perceived by the client, and the expected profit to be achieved in the short-term operation of the SC. Therefore, a two-stage stochastic formula is derived that considers the uncertainty associated with reactions to future demand in an attempt to compute a set of Pareto-optimal solutions to the proposed problem. Each of these solutions comprises an SC schedule and a set of values for the parameters of the offers. Through comparison of the Pareto curve and the solution that would be obtained without negotiation, a set of offers representing contracts that are desirable from the supplier's perspective is obtained. This set of values may be offered by the supplier to reach an agreement with the customer during the negotiation procedure. The proposed approach facilitates a rational negotiation, in the sense that it enables the negotiator to simultaneously process many more data related to production and transport plans and customer preferences, thus avoiding having to rely exclusively on the negotiator's beliefs and interests.

An agent-based model to support negotiation-based order acceptance in a multi-plant enterprise

“…They utilized integer programming for this purpose. Guillen et al (2005) proposed decision support in making optimal oer proposals during the negotiation process between a general customer-supplier pair that takes place in chemical industry supply chains. The issues for negotiation were price and due date.…”

Innovative Tools for Business Coalitions in B2B Applications

“…The authors did not study the auctioning processes and mechanisms among suppliers in the e-marketplace. Guillén et al (2005) presented a novel approach that provides decision support in making optimal offer proposals during the negotiation process between customers and suppliers that takes place in chemical industry supply chains. The main difference with the research proposed in this book is related to the industry context.…”

Addressing the scheduling of chemical supply chains under demand uncertainty

“…Revenues are obtained through sales of final products, while costs are due to the underproduction, that is, leaving part of the demand unsatisfied, purchases of raw materials, consumption of utilities and inventories as stated by Eq. 17 (18) Finally, the overall problem (model SCHEDMS) can be expressed as follows maximize E͓Profit͔ subject to…”

“…The plants of the network are assumed to be multipurpose batch-chemical plants, with a structure adapted from the case study proposed by Kondili et al 35 There is unlimited storage for all the states. The initial inventories are (13,18,13,16,12,17,12,15) supposed to be equal to zero for all the states. Two different types of utilities are considered, the first one, which is associated with the labor tasks, has a cost of 0.25 m.u.…”