Supply chain formation using agent negotiation

This study has used agent negotiation as a way to allocate numerous orders to many participants for supply chain formation. In order to build a strategic cooperative relationship based on information sharing, agent negotiation provides a coordination mechanism in which all the participants, including buyers, manufacturers, and suppliers, are able to attain their own profits. It also provides a Pareto optimal solution from the viewpoint of a whole supply chain. This study has taken into consideration the fact that both tardiness and earliness production costs occur in the Single Machine Earliness/Tardiness (SET model) scheduling and that participating members are in a competitive relationship. We have explored and experimented to prove that agent negotiation leads to a Pareto optimal solution in a dynamic supply chain environment. This study has built a mathematical model to test the performance of agent negotiations, while making a comparison with a heuristic approach.