UCL School of Management is delighted to welcome Baris Tan, Koc University, to host a research seminar discussing ‘Modeling and Analysis of a Collaborative Production Network.’
As a response to the competitive business environment, producers began using cooperation-based business models to utilize their capacity effectively and access more customers. Network structures referred as Dynamic Manufacturing, Virtual Manufacturing, Collaborative Manufacturing, and Cloud Manufacturing allow producers to cooperate and interact with their customers in a more effective way.
In this study, we examine the collaborative production business model for a group of producers serving their own customers and also have access to external customers who can make an agreement to buy products at a lower price if a desired service level can be guaranteed. In order to meet the desired service level requirement of the external customers at the offered price , the collaborative production network consolidates the external customers for its members and dispatches an arriving external customer to one of the participants.
Our main objective is to answer the following main question: What is the benefit of joining a collaborative network depending on the characteristics of the producers and the external customers? In order to answer this question, we also answer the following questions regarding the operation of this collaborative network: how do the producers manage their production and decide on meeting the demand from different group of customers; how does the network operate depending on different level of information exchange between the producers and the network; and how do the producers decide on joining the collaborative network?
We model the producers as make-to-stock queues and examine the operation of the collaborative network under the static and dynamic dispatching policies depending on the level of information that the participating manufacturers share with the network. For the network operating with the dynamic dispatching policy, we determine the optimal production and rationing policies for each participating manufacturer as well as the optimal dispatching policy for the network by analyzing a Markov decision process. We also propose an accurate approximation method to analyze a network with a high number of homogenous producers.
Our results show that depending on the parameters of the producers and the external market, a collaborative network provides financial benefits to the producers and also allows the external customers to obtain goods at a lower price with the desired service level.
(joint work with Behnaz Hosseini (Ph.D. student))