Decentralised capacitated planning with minimal-information sharing in a 2-echelon supply chain

Abstract

This paper aims at modelling decentralised planning at the tactical level, with minimal-information sharing coordination, in a 2-echelon supply chain with multiple actors at each echelon. Suppliers manage production and storage at the upstream echelon, while retailers manage transportation and storage at the downstream echelon. The main features of the planning process are (1) decentralisation and coordination using contracts and sharing of only order/supply proposals, and (2) iteration on a rolling horizon. Actor planning is modelled as a capacitated lot-sizing problem on a finite horizon, with the focus on quality of service. The objective is to minimise costs, with a high lost sales penalty if demand is not met. Two other decision problems are pointed out and modelled with Mixed Integer Programming: (1) lost sales allocation between the retailers when their demands cannot be satisfied; and (2) allocation of orders between the suppliers. A multi-agent system combines simulation of the planning process and optimisation of the local decision processes. Several strategies, including retailers’ beliefs about suppliers’ production capacity are proposed and experimentally tested, with two patterns of production capacities. The results compare the proposed allocation strategies and highlight the relevance of the proposed framework for the studied planning problem.

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