Modelling and analysis of a network organization for cooperation of manufacturers on production capacity
type: Item
instance of: scholarly article
title: Modelling and analysis of a network organization for cooperation of manufacturers on production capacity
zbMATH Open document ID: 1200.91161
DOI: 10.1155/MPE/2006/85103
published in: Mathematical Problems in Engineering
publication date: 2010-12-01T00:00:00Z
review text: Summary: We present an analytical model to analyze the operation of a productive cooperation network where producers cooperate on production capacity. Producers have limited capacity and have access to subcontractors at a higher cost. A single-unit auction-based allocation mechanism is proposed to allocate an arriving order based on the producers' cost structures and their current loads to maximize the total profit. We show that when the costs are private information, producers are willing to cooperate in order to increase their expected profit. Furthermore, it is shown that there is an equilibrium where producers bid their actual costs. The cooperation can also generate extra profit to cover a part of its operating expenses with this allocation mechanism. A continuous-time Markov chain model is utilized to evaluate the performance of the allocation mechanism where producers submit their myopic best response bids. The cooperation case is also compared with the no-cooperation case and also with the centralized operation of producers.
Mathematics Subject Classification ID: 91B38
Mathematics Subject Classification ID: 91B70
zbMATH DE Number: 5822529
author: Barış Tan
MaRDI profile type: Publication
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full work available at URL: https://doi.org/10.1155/mpe/2006/85103
OpenAlex ID: W2054257013
description: scientific article; zbMATH DE number 5822529