Modelling and analysis of a network organization for cooperation of manufacturers on production capacity
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...
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Series: | Mathematical Problems in Engineering |
Online Access: | http://dx.doi.org/10.1155/MPE/2006/85103 |
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doaj-c762df615a3a4deeaf6bfa0230e327832020-11-24T22:58:06ZengHindawi LimitedMathematical Problems in Engineering1024-123X1563-51472006-01-01200610.1155/MPE/2006/8510385103Modelling and analysis of a network organization for cooperation of manufacturers on production capacityBaris Tan0Graduate School of Business, Koç University, Rumelifeneri Yolu Saryer, Istanbul 34450, TurkeyWe 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.http://dx.doi.org/10.1155/MPE/2006/85103 |
collection |
DOAJ |
language |
English |
format |
Article |
sources |
DOAJ |
author |
Baris Tan |
spellingShingle |
Baris Tan Modelling and analysis of a network organization for cooperation of manufacturers on production capacity Mathematical Problems in Engineering |
author_facet |
Baris Tan |
author_sort |
Baris Tan |
title |
Modelling and analysis of a network organization for cooperation of manufacturers on production capacity |
title_short |
Modelling and analysis of a network organization for cooperation of manufacturers on production capacity |
title_full |
Modelling and analysis of a network organization for cooperation of manufacturers on production capacity |
title_fullStr |
Modelling and analysis of a network organization for cooperation of manufacturers on production capacity |
title_full_unstemmed |
Modelling and analysis of a network organization for cooperation of manufacturers on production capacity |
title_sort |
modelling and analysis of a network organization for cooperation of manufacturers on production capacity |
publisher |
Hindawi Limited |
series |
Mathematical Problems in Engineering |
issn |
1024-123X 1563-5147 |
publishDate |
2006-01-01 |
description |
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. |
url |
http://dx.doi.org/10.1155/MPE/2006/85103 |
work_keys_str_mv |
AT baristan modellingandanalysisofanetworkorganizationforcooperationofmanufacturersonproductioncapacity |
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