Multidimensional utility analysis in a two-tier supply chain

Abstract

Utility analysis is the measure of efficiency in supply chain, which is the function of strategy decided by supply chain players. The competition provided by the coopetitive (cooperation and competition) environment of new manufacturing systems demands analyzing the strategic interaction between two tiers of supply chains such as manufacturer–supplier. However, setting the optimal strategy for rational and intelligent players with conflicting interests is a challenging task for the supply chain managers. In this paper, the multidimensional utility concept is designed and developed for a social outcome with which every player is agreed without causing conflicts. The procurement process of Indian Railways Catering and Tourism Corporation (IRCTC) is studied for the multi-dimensional utility analysis with two parameters: quantity of interest and price per unit. Comparative analysis shows the proposed social utility outperforms the individual utilities of IRCTC and suppliers’ utilities. Based on the results, the framework for the procurement process of IRCTC has been proposed, which includes incentives for the players participating in the supply chain design process.