Demand and capacity sharing decisions and protocols in a collaborative network of enterprises

Authors:
Sang Won Yoon;Shimon Y. Nof
Affiliations:
Department of Systems Science and Industrial Engineering, State University of New York at Binghamton, Binghamton, NY, 13902-6000, USA;School of Industrial Engineering, Purdue University, West Lafayette, IN, 47906, USA
Venue:
Decision Support Systems
Year:
2010

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Abstract

This research is motivated by the arbitrary nature of customer orders and dynamic changes of demand patterns and the ability to overcome such uncertainty by enterprise collaboration. Such collaboration is an attractive strategy, and a set of enterprises can form a beneficial collaborative network. In a collaborative network of enterprises (CN), each enterprise is a self-operative organization, and enterprise collaboration needs to be carefully controlled to achieve mutual benefits. In this research, therefore, demand and capacity sharing protocols have been designed to find efficient demand and capacity sharing decisions in the CN. New protocol models are developed and numerical examples indicate that enterprise collaboration by the proposed demand and capacity sharing decisions and protocols can significantly increase the demand fulfillment rate and the total profit of the CN. While complete collaboration can increase the demand fulfillment rate, partial collaboration by design is preferred in terms of the total profit of the CN under certain conditions. It is found that a certain level of enterprise collaboration is required to maximize the total profit of the CN.