Price negotiation for capacity sharing in a two-factory environment using genetic algorithm

Price negotiation for capacity sharing in a two-factory environment using genetic algorithm

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Article ID: iaor2009857
Country: United Kingdom
Volume: 46
Issue: 7
Start Page Number: 1847
End Page Number: 1868
Publication Date: Jan 2008
Journal: International Journal of Production Research
Authors: , , ,
Keywords: heuristics: genetic algorithms
Abstract:

Uncertain and lumpy demand forces capacity planners to maximize the profit of individual factory by simultaneously taking advantage of outsourcing to and/or being outsourced from its supply chain and even competitors. This study develops a resource-planning model of a large manufacturer with two profit-centered factories. The proposed model enables a collaborative integration for resource and demand sharing which is highly attractive to the high-tech industries against the challenges of short product life cycle, intensive capital investment and decreasing marginal profit. Each of the individual factories applies an economic resource-planning model and a genetic algorithm to improve its objective while purchasing extra capacity requirement from its peer factory or selling extra capacity of resources to the others through a negotiation algorithm. This study makes a contribution in successfully building a mutual negotiation model for a set of customer tasks to be realized by the negotiating parties.

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