Coordination of master planning in supply chains

Martin Albrecht

European Journal of Operational Research, 2025, vol. 324, issue 1, 118-128

Abstract: This paper proposes a new mechanism for coordinating master planning in a buyer–supplier supply chain. Parties take different roles in the mechanism: there is an informed party (IP) and a reporting party (RP). The mechanism consists of three steps. First, the RP defines a lump sum payment, which he will receive if a supply proposal that deviates from the default is implemented. Second, parties generate new supply proposals based on mathematical programming models. The RP communicates his profit changes for the new proposals to the IP. Third, the IP decides whether to implement one of the new proposals and to pay to the RP the lump sum minus the RP’s local profit change. We show that the mechanism is strategyproof, budget-balanced and individually rational. If the RP has uniformly distributed prior knowledge about the actual surplus from coordination, at least 3/4 of the surplus will be realized on the average. Our computational tests suggest that the coordination mechanism is effective and versatile. It identifies near optimal solutions for various master planning models and outperforms an existing approach from literature.

Keywords: Supply chain management; Supply chain coordination; Coordination mechanism; Master planning; Lot-sizing (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0377221725000761
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:ejores:v:324:y:2025:i:1:p:118-128

DOI: 10.1016/j.ejor.2025.01.033

Access Statistics for this article

European Journal of Operational Research is currently edited by Roman Slowinski, Jesus Artalejo, Jean-Charles. Billaut, Robert Dyson and Lorenzo Peccati

More articles in European Journal of Operational Research from Elsevier
Bibliographic data for series maintained by Catherine Liu ().