Operations Research, Systems Engineering and Industrial Engineering Commons^™

Multi-Party Multi-Period Supply Chain Coordination, Thin Yin Leong, Michelle Lee Fong Cheong

Research Collection School Of Computing and Information Systems

We apply combinatorial auction as a coordination mechanism to smooth demands placed on suppliers' limited production capacities, allowing several manufacturers to share common suppliers effectively. Products are bidders bidding for parts from suppliers, consuming their capacities in different time periods. The fourth party logistic (4PL) provider acts as the auctioneer to coordinate bids and perform price iterations. We leverage on the strong links between the Lagrangian relaxation method and combinatorial auction, where the Lagrange multipliers serve as the supply capacity reserve prices, to balance the demand and supply of capacities. To prevent cyclic behaviour and to increase convergence speed, we …