Improved augmented Lagrangian coordination for optimizing supply chain configuration with multiple sharing elements in industrial cluster

Purpose: The purpose of this paper is to study various combination forms of the three basic sharing elements (i.e. orders sharing, manufacturers capacity sharing and suppliers capacity sharing) in the cluster supply chain (CSC), formulate a distributed model to protect enterprises’ decision privacy and seek to develop an effective method for solving the distributed complex model. Design/methodology/approach: A distributed assembly cluster supply chain configuration (ACSCC) model is formulated. An improved augmented Lagrangian coordination (ALC) is proposed and used to solve the ACSCC model. A series of experiments are conducted to validate the improved ALC and the model. Findings: Two major findings are obtained. First, the market order’s quantity change and the sales price of the product have a great impact on both the optimal results of the ACSCC and the cooperative strategy, especially, when the market order increases sharply, enterprises have to adopt multiple cooperative strategies to complete the order; meanwhile, the lower sales price of the product helps independent suppliers to get more orders. Second, the efficiency and computational accuracy of the improved ALC method are validated as compared to the centralized ALC and Lingo11. Research limitations/implications: This paper formulated the single-period ACSCC model under certain assumptions, yet a multi-period ACSCC model is to be developed, a more comprehensive investigation of the relationships among combination forms is to be extended further and a rigid proof of the improved ALC is necessary. Practical implications: Enterprises in the industrial cluster should adopt different cooperative strategies in terms of the market order’s quantity change and the sales price of the product. Social implications: The proposed various combination forms of sharing elements and the formulated ACSCC model provide guidance to managers in the industrial cluster to choose the proper policy. Originality/value: This research studies various combination forms of the three basic sharing elements in the CSC. A distributed ACSCC model has been established considering simultaneously multiple sharing elements. An improved ALC is presented and applied to the ACSCC problem.