A heuristic methodology for order distribution in a demand driven collaborative supply chain

This paper studies vertical and horizontal supply chain collaboration, and proposes a demand sharing methodology based on a set of predefined collaboration rules. Supply chain collaboration is prevalent, and has been recognized to be one of the important issues in improving competition strength. However, implementation of supply chain collaboration encounters many barriers, such as type, scope and security of information sharing, equity in benefits sharing, joint decision making, coordination tasks etc. For these reasons this paper proposes a framework of a central coordination system, which is equipped with a multi-criteria genetic optimization feature. The optimization methodology combines an analytic hierarchy process with genetic algorithms. It deploys an analytic hierarchy process to model the collaboration rules, govern the demand allocations, and evaluate the fitness values of chromosomes. The implementation of the proposed central coordination system is demonstrated by a hypothetical three-echelons supply chain network.