A Study on Market-based Strategic Procurement Planning in Convergent Supply Networks

Abstract

We present a market-based decentralized approach which uses a market-oriented programming algorithm to obtain Pareto-optimal allocation of resources traded among agents which represent enterprise units in a supply network. The proposed method divides the network into a series of Walrsian markets in order to obtain procurement budgets for enterprises in the network. An interaction protocol based on market value propagation is constructed to coordinate the flow of resources across the network layers. The method mitigates the effect of product complementarity in convergent network by allowing for enterprises to hold private valuations of resources in the markets.