Negotiation mechanisms for an order subcontracting and scheduling problem

Xiuli Wang, Sujie Geng, Edwin Tai Chiu Cheng

Research output: Journal article publicationJournal articleAcademic researchpeer-review

6 Citations (Scopus)

Abstract

We consider a decentralized decision-making environment in which a firm and its subcontractor make decisions on subcontracting heterogeneous orders for processing with private information. We design two market-like negotiation mechanisms that adopt the multi-round ascending pricing framework under two negotiation protocols, labeled as Protocols 1 and 2. Applying game-theoretic and combinatorial optimization approaches, we analyze the decision behaviors of both players and derive the final negotiation outcomes. We find that the negotiation mechanism under Protocol 1 cannot guarantee the existence of the equilibrium price, while the negotiation mechanism under Protocol 2 result in equilibrium solutions. For some special cases, we investigate the system performance bounds under the two negotiation mechanisms and find that the performance bounds under the former are better than those under the latter.

Original languageEnglish
Pages (from-to)154-167
Number of pages14
JournalOmega (United Kingdom)
Volume77
DOIs
Publication statusPublished - 1 Jun 2018

Keywords

  • Negotiation mechanisms
  • Performance bound
  • Scheduling
  • Subcontracting

ASJC Scopus subject areas

  • Strategy and Management
  • Management Science and Operations Research
  • Information Systems and Management

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