Negotiation-based approach for order acceptance in a multiplant specialty chemical manufacturing enterprise

Abstract

Order acceptance under uncertainty is a challenging problem in supply chain management, especially in make-to-order plants, such as in a specialty chemical manufacturing enterprise. In this work, we consider the effect of rush orders and design a negotiation-based policy for order acceptance. Rush orders pose a complex challenge primarily because the different actors involved (customer and enterprise) have different interests and asymmetric information. In addition, the interaction involves uncertainties both in the short- and long-term. To capture the rich complexity of the problem and provide a conceptual basis for developing agent-based models for such negotiation situation, this paper presents a general framework for negotiation and illustrates it using the customer-enterprise rush order due date negotiation case. On the basis of this framework, an agent-based model is developed. Various experiments are conducted to evaluate the effect of due date negotiation on profit and long-term customer behavior. © 2011 American Chemical Society.