Collaborative capacity sharing among manufacturers on the same supply network horizontal layer for sustainable and balanced returns

Abstract

To deal with volatile demand and rapidly changing manufacturing technologies for sustainable returns, as a solution, collaborative capacity sharing (CCS) among manufacturers at the same horizontal layer in supply networks is discussed in this research, especially focusing on a long-term aspect. Such horizontal collaboration can minimise manufacturers’ lost sales, as well as maximise their production capacity utilisation in a long-term period against lumpy demand. Hence, to help manufacturers determine whether and with whom they have to collaborate a CCS protocol based on a theoretical analysis is developed. It is a distributed decision protocol suggesting an effective coalition for each manufacturer. Furthermore, for well-balanced distribution of resulting profits to each manufacturer, two procedures are proposed: (1) determination of appropriate substitution production cost and (2) bids among manufacturers/coalitions. To evaluate the effect of those processes, two types of CCS protocols are designed – CCS-(1) and CCS-(2); only CCS-(2) performs those procedures. A numerical experiment is conducted to compare the performance of four models: No collaboration, complete collaboration, and two types of selective collaboration by CCS-(1) and CCS-(2). The performance of CCS-(2) is at least equal to or better than other models with higher and balanced returns.