![]() The appropriate planning methods are necessary for optimizing the behavior of the production. The second component should support the information visibility and transparency both within and among the partners and facilitates the realization of real-time enterprises. Finally, the third component should guarantee that the partners act upon to the common goals of the supply chain. The general method for studying coordination consists of two steps. At first, one assumes a central decision maker with complete information who solves the problem. The result is a first-best solution which provides bound on the obtainable system-wide performance objective. ![]() In the second step one regards the decentralized problem and designs such a contract protocol that approaches or even achieves the performance of the first-best.Ī contract is said to coordinate the channel, if thereby the partners' optimal local decisions lead to optimal system-wide performance. Channel coordination is achievable in several simple models, but it is more difficult (or even impossible) in more realistic cases and in the practice. Therefore, the aim is often only the achievement of mutual benefit compared to the uncoordinated situation.Īnother widely studied alternative direction for channel coordination is the application of some negotiation protocols. Such approaches apply iterative solution methods, where the partners exchange proposals and counter-proposals until an agreement is reached. The negotiation protocols can be characterized according to the following criteria: For this reason, this approach is commonly referred to as collaborative planning. The initial proposal is most frequently generated by the buyer company which is called upstream planning. By contrast, when the initiator is the supplier, it is referred to as downstream planning. In several cases there already exists an initial plan (e.g., using rolling schedules or frame plans). ![]() There are also some protocols where the initial plan is generated randomly.
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