ATC based coordination of distributed production planning and supplier selection

In a supply chain, several plants produce one kind of product jointly, each of which makes plan autonomously. Hence, in order to minimize the total cost of the supply chain, a strategy is needed to coordinate the plant plans. ATC (analytical target cascading) is considered more suitable for such distributed planning environment. Each plan outsources some components to produce the product, so sub models are built in ATC model for plant to negotiate component supply plans with suppliers and select supplier, according to production plan. The numerical study in this paper demonstrates (1) ATC is an efficient method for coordinating the distributed production planning by comparing ATC with AAO (all at once) method, (2) the negotiation model is powerful in negotiation with suppliers and supplier selection.