As supply chains become bigger and dynamically structured involving multiple organizations with different interests, it is impossible for a single organization to control a whole supply chain. So, decentralization of decision rights is an inevitable facet of managing modern supply chains. However, controlling in a decentralized mode can fail without appropriate coordination mechanisms. When the agents of a supply chain are not willing to cooperate in terms of information sharing, the whole supply chain can exhibit expensive inefficiencies such as the bullwhip effect. In this paper, we design a trustworthy decentralized coordination mechanism for dynamic lot-sizing in distribution networks, as an effort to motivate information sharing. We design multiple auctions and each auction coordinates the plans of a supplier and its customers by trading the right of managing the supplier's inventory plan. The coordination mechanism makes a reasonable profit and the profit is divided in an agreeable way. Also, the profits are actual because of the capability of supporting a truth-telling environment. Therefore, the designed coordination mechanism is trustworthy in that it guarantees the right benefits to all the agents in return for information sharing.
All Science Journal Classification (ASJC) codes
- Strategy and Management
- Management Science and Operations Research
- Industrial and Manufacturing Engineering