On determining leading coalitions in supply chains: methodology and application

Abstract

Supply chain collaboration has the potential to address issues of inefficiency and lack of coordination that often drives down the competitiveness of supply chains. However, collaboration in supply chains is difficult due to ever increasing complexity and conflicting objectives prevalent in supply chains, and a growing challenge is to be able to identify the optimal configuration of collaboration that benefits the supply chain as a whole. The inherent complexity of supply chains has lead to the emergence of so-called orchestrators to help coordinate supply chains and enable collaboration. In this paper we address a specific problem that an orchestrator might face: given a set of potential coalitions that could form in a given supply chain, together with the means by which collaborative benefits should be allocated, which coalition should form? We propose a new methodology based on what we call leading coalitions to address this coalition selection problem, which borrows concepts from cooperative game theory to ensure stability and fairness of the final selection. The proposed methodology is applied to linear production processes where agents collaborate by pooling their resources, and a computational study is performed on a large set of instances in order to gain insight into the working of the methodology.