Distributed Supply Chain Planning for Multiple Companies with Limited Local Information

With rapid progress in market liberalization of a variety of products, intermediates, or electrical power energy, many companies are trying to integrate their enterprises with other organizations by optimizing planning and distribution for multiple companies. Supply chain coordination for Business to Business (B2B) is remarkably increasing for several enterprises at different industry levels with the progress of deregulation of trading products in recent years. Partner companies are reducing distribution costs while keeping high service levels to vendors. For example, in the petroleum industry, several companies at a chemical complex depend on other companies to provide raw materials or to deliver intermediates through a shared pipeline connected to multiple companies at lower delivery costs (Taneda, 2003). In most companies, strategic instructions are given to each section in the company. Each company is thoroughly capable in regard to its own production planning and scheduling. The supply and demand planning must be coordinated by mutual negotiations across supply chain. Such coordination has been performed by the communications among human operators. However, in recent years, the decision making for each company is becoming increasingly complex with huge number of alternative planning for a number of companies. Conventional planning system has been configured to obtain a near optimal planning with detailed information about multiple companies. Organizations generally have their own private coordination methods, and that accessing others' private information or intruding on their decision-making authority should be avoided. In a practical situation, a plan must be created without sharing such confidential information as production cost, inventory holding costs, or price of products for competitive companies. In this chapter, a framework for distributed supply chain planning system without requiring all of information for multiple companies is proposed. Planning coordination can be efficiently automated by the proposed method. Various types of supply chain models have been proposed in the literature (Vidal & Goetschalckx, 1997). A midterm planning model involving maximization of total profits and minimization of production, inventory, and transportation costs has been developed within a company (McDonald & Karimi, 1997). Planning coordination problems for production and distribution for multiple organizations are studied by Gaonkar and Viswanadham, 2002, O pe n A cc es s D at ab as e w w w .in te ch w eb .o rg