Supply chain coordination by means of automated negotiations

The coordination within supply chains depends on appropriate forms of distributed decision making. Considering joint decisions as formal contracts, the coordination problem may be regarded as a search process in a corresponding contract space. Automated negotiations, with firms or decision making units represented as software agents, can provide an effective mechanism to determine mutually beneficial contracts. The generic negotiation approach examined in this paper is based on a formal specification of contracts that represent bilateral collaborations between two firms (agents) which aim for the coordination of their production sequences. Taking into account asymmetric information and opportunistic behavior, a mediator supports the negotiation process. This mediator repeatedly generates new candidate contracts, which are accepted or rejected by the agents according to particular strategies. We define an explicit mechanism for implementing a cooperative acceptance criterion, whereby agents conditionally agree on utility deteriorations according to a probabilistic criterion similar to that of simulated annealing. The proposed design enables the definition of negotiation rules to be verified by the mediator, forcing both agents to behave in a cooperative manner. The negotiation approach is validated for different supply chain sequencing scenarios. In spite of the simplicity and generality of the negotiation mechanism, the experimental results are very promising. Thus automated negotiations may constitute an effective means for coordinating decisions within supply chains.