Buyer behavior adaptation based on a fuzzy logic controller and prediction techniques

The current form of Web provides numerous product resources available to users. Users can rely on intelligent agents for purchase actions. These actions are taken in specific environments such as Electronic Markets (EMs). In this paper, we study the interaction process between buyers and sellers and focus on the buyer side. Each buyer has the opportunity to interact with a number of sellers trying to buy the most appropriate products. This interaction can be modeled as a finite horizon Bargaining Game (BG). In this game, players have opposite goals concerning the product price. We adopt a number of techniques in the buyer side trying to give the appropriate level of efficiency in the buyer decision process. The buyer uses a prediction mechanism in combination with the use of Fuzzy Logic (FL) theory in order to be able to predict the upcoming seller proposal and, thus, understand the seller pricing policy. Based on this, he/she can adapt his/her behavior when trying to purchase products. The buyer adaptation mechanism produces the belief that the buyer has about the seller pricing policy and a parameter that indicates his/her own pricing policy which yields the buyer offers in the upcoming rounds. Moreover, the buyer is based on FL system that derives the appropriate actions at every round of the BG. Our results show that the combination of Fuzzy Logic (FL) with the above-mentioned techniques provides an efficient decision mechanism in the buyer side that in specific scenarios outperforms an optimal stopping model.     

Design of contract parameters in a closed-loop supply chain

We study an extended joint economic lot size problem which incorporates the return flow of remanufacturable used products. The supply chain under consideration consists of a single supplier and a single buyer. The buyer orders a single product from the supplier, uses it for her own needs, and collects the remanufacturable items after use. The ordered items are shipped from the supplier to the buyer in the lot-for-lot fashion by a vehicle which also returns the collected used items from the buyer to the supplier for remanufacturing and subsequent service of the buyer’s demand in the next order cycle. For satisfying the total demand, the supplier manufactures new items or remanufactures used ones received from the buyer. For given demand, productivity, collection rate, disposal cost, setup cost, order cost, holding cost for serviceable and nonserviceable products at the supplier as well as the buyer the lot size (order size) for the supplier (buyer) has to be found which minimizes the total cost. Furthermore, we address a decentralised decision making of the parties under a two-part tariff and determine their equilibrium strategies within the Nash framework.     

Endogenous budget constraints

This paper considers a model in which a single buyer seeks to buy a continuum of objects from a continuum of sellers. The sellers specify prices at which they are willing to sell their objects to the buyer, and the buyer then decides which objects to purchase. I illustrate that the buyer has an incentive to commit to a binding budget constraint before seeking offers from the sellers.     

Inventory replenishment model: lot sizing versus just-in-time delivery

Motivated by a practical industrial problem where a manufacturer stipulates a minimum order from each buyer but where a local dealer promises the buyer a just-in-time delivery with a slightly higher unit cost, this paper uses a dynamic lot-sizing model with a stepwise cargo cost function and a minimum order amount constraint to help the buyer select the supplier with minimum total cost.     

An integrated economic lot-size model for vendor–buyer inventory system when input is random

An integrated strategy is discussed for both vendor and buyer when the input is random. It is shown numerically that the cooperative approach is beneficial to reduce the cost when compared with an independent decision by both the parties. Though the integrated total cost decreases, the buyer’s cost increases due to random input in his inventory. To encourage the buyer to order a large quantity, a trade credit is offered by the vendor to the buyer to settle the account. A conciliation factor is suggested to share the benefits.     

A bargaining model with asymmetric information for a single supplier–single buyer problem

Banerjee’s joint economic lot size (JELS) model represents one approach to minimizing the joint total relevant cost of a buyer and a supplier by using a joint optimal order and production policy. The implementation of a jointly optimal policy requires coordination and cooperation. Should the buyer have the market power to implement his own optimal policy as that one to be used in the exchange process no incentive exists for him to choose a joint optimal policy. A joint policy can therefore only be the result of a bargaining process between the parties involved. The supplier may make some sort of concession such as a price discount or a side payment in order to influence the buyer’s order policy. A critical assumption made throughout in supply chain literature is that the supplier has complete knowledge about the buyer’s cost structure. Clearly, this assumption will seldom be fulfilled in practice. The research presented in this paper provides a bargaining model with asymmetric information about the buyer’s cost structure assuming that the buyer has the power to impose its individual optimal policy.     

Optimal multi-period insurance contracts

In multi-period insurance contracts (such as automobile insurance contracts), unlike single-period ones, the premiums that the insured must pay increase whenever he files a claim. Hence, the buyer faces a problem that is absent in one-period models, namely: he must determine for which damages he should file a claim and for which he should not.The optimal claims policy of the buyer is presented for a large class of insurance contracts. It is shown that the buyer will file a claim only if it is larger than some critical value. Based on this it is shown that the buyer prefers a contract that provides full coverage above a deductible for damages that exceed his critical value. In this case the optimal contract is not unique since the buyer is indifferent to the form of the contract for damages below his critical value. It is shown, however, that as in one-period models (Arrow (1963, 1974)) there exists an optimal contract that provides full coverage above a deductible. In multi-period setting, however, the buyer will file a claim only if the damage is sufficiently higher than the deductible.It is also shown that the buyer prefers a strictly positive deductible. Unlike the one-period case (Mossin (1968)), this result holds true even if the premium rates equal the expected payments.     

Bargaining order and delays in multilateral bargaining with heterogeneous sellers

We consider a complete-information multilateral bargaining game in which a single buyer negotiates with two heterogeneous sellers selling perfect complementary units. While bilateral negotiations take place through a sequence of offers and counteroffers, the bargaining order is exogenously given. We solve for the conditions under which (a) the buyer prefers to negotiate with the lower-valuation seller first and (b) efficient (inefficient) outcomes emerge for the two bargaining orders. We find that the buyer prefers to negotiate with the lower-valuation seller first whenever the players are relatively impatient or the sellers are sufficiently heterogeneous. We show that there exists a unique efficient outcome when the buyer negotiates first with the lower-valuation seller and the sellers are sufficiently heterogeneous; however, significant delay in reaching agreements may arise when they are not. In case the buyer bargains with the higher-valuation seller first, an inefficient outcome is shown to exist even when players are extremely impatient.     

Mitigating supply risk: an approach with quantity flexibility procurement

This paper considers a buyer that procures from its major supplier whose production is subject to random yield risk. To mitigate supply risk, the buyer can procure from another reliable supplier who provides quantity flexibility (QF) contract. Under both deterministic and stochastic demand, we study the buyer’s optimal procurement decisions. We analyze the structural properties of optimal solutions and identify the conditions under which the quantity flexibility procurement policy should be used. We also examine the effect of supply risk, flexibility, wholesale price and demand risk on the procurement decisions. We find that the higher supply risk and demand risk reduce the buyer’s profit but have different impact on the buyer’s order policy. For the QF supplier, it may not obtain more orders by providing larger flexibility to the buyer, on the contrary, doing this may benefit the risky supplier. For the QF supplier or risky supplier, given its competitor’s wholesale price, it can increase its order share by lower wholesale price.     

A fuzzy mathematical model for the joint economic lot size problem with multiple price breaks

This paper applies fuzzy mathematical programming to solve the joint economic lot size problem with multiple price breaks. In order to entice the buyer to increase the order quantity, it is a common practice for the seller to offer quantity discounts to the buyer. From the system viewpoint, the joint cost for the seller and buyer can be minimized only when the buyer increases his economic order quantity. The problem is how to determine the number of price breaks, as well as the quantity discount and order quantity at each price break, to achieve the optimal joint cost. Fuzzy mathematical programming provides a very efficient algorithm to solve the above problem simultaneously from the perspectives of the seller and the buyer. Another common problem in joint economic lot size model is how to split the system profit between the seller and the buyer. Whereas the traditional approach to this problem is to divide the profit based on a certain ratio determined by the bargaining power of both parties, fuzzy mathematical programming can achieve the same satisfaction level to both parties based on their respective cost functions.     

A procurement model using capacity reservation

In this paper we model a scenario where a buyer reserves capacity from one or more suppliers in the presence of demand uncertainty. We explicitly derive suppliers’ capacity reservation price, which is a function of their capacity, amount of capacity reserved by the buyer and other parameters. The buyer operates in a “built-to-order” environment and needs to decide how much capacity to reserve and from how many suppliers. For a strategy of equal allocation of capacity among the selected suppliers we develop closed form solutions and show that the model is robust to the number of suppliers from whom capacity is procured through reservation. When the parameters of demand distribution changes the supply base is likely to remain more or less the same. Our analysis further shows that increasing the number of pre-qualified suppliers does not provide significant advantages to the buyer. On the other hand, a pre-qualified supply base with greater capacity heterogeneity will benefit the buyer.     

The optimal pricing and ordering policy for an integrated inventory model when trade credit linked to order quantity

In traditional inventory models, it is implicitly assumed that the buyer must pay for the purchased items as soon as they have been received. However, in many practical situations, the vendor is willing to provide the buyer with a permissible delay period when the buyer’s order quantity exceeds a given threshold. Therefore, to incorporate the concept of vendor–buyer integration and order-size-dependent trade credit, we present a stylized model to determine the optimal strategy for an integrated vendor–buyer inventory system under the condition of trade credit linked to the order quantity, where the demand rate is considered to be a decreasing function of the retail price. By analyzing the total channel profit function, we developed some useful results to characterize the optimal solution and provide an iterative algorithm to find the retail price, buyer’s order quantity, and the numbers of shipment per production run from the vendor to the buyer. Numerical examples and sensitivity analysis are given to illustrate the theoretical results, and some managerial insights are also obtained.     

Multi-criteria supplier selection problem with fuzzy demand: a newsvendor model

Computational Management Science - In sourcing decisions, a buyer encounters three main issues. The first issue is the demand uncertainty that leads the buyer to find the optimal inventory level...     

Sourcing under incomplete information and negative capacity-cost correlation

We study a sourcing problem where a buyer reserves capacity from a set of suppliers. The suppliers have finite capacity and their unit production cost is a decreasing function of their capacity, implying scale economies. The capacity of each supplier and therefore the cost is his private information. The buyer and other suppliers only know the probability distribution of the supplier’s capacity. The buyer’s demand is random and she has to decide how much capacity to reserve in advance from a subset of suppliers and how much to source from marketplace. In this study we determine the buyer’s optimum reservation quantity and the size of the supply base. We find the presence of such capacity cost correlation leads to supply base reduction.     

Integrated inventory models considering the two-level trade credit policy and a price-negotiation scheme

This paper develops the integrated inventory models with permissible delay in payment, in which customers’ demand is sensitive to the buyer’s price. The models consider the two-level trade credit policy in the vendor–buyer and buyer–customer relationships in supply chain management. A simple recursive solution procedure is proposed for the integrated models to determine the buyer’s optimal pricing and production/order strategy. Although the total profit from the buyer and vendor increases together, the buyer’s share lessens. To compensate the buyer’s loss due to the cooperative relationship, a negotiation system is presented in order to allocate the profit increase to the vendor and buyer to determine the pricing and production/order strategy. A numerical example and sensitivity analysis are provided to illustrate the proposed model. The results indicate that the total profit from the buyer and vendor together can increase, although a price discount is given to the buyer in the proposed models.     

Price markdown scheme in a multi-echelon supply chain in a high-tech industry

This paper studies the price markdown scheme in a supply chain that consists of a supplier, a contract manufacturer (CM), and a buyer (retailer). The buyer subcontracts the production of the final product to the CM. The CM buys the components from the supplier and charges the buyer a service fee for the final product produced. The price markdown is made possible by the supplier with the development of new manufacturing technologies that reduce the production cost for the sourced component. Consequently, the buyer adjusts the retail price in order to possibly stimulate stronger demand that may benefit both the supplier and the buyer. Under this scenario, we identify the optimal discount pricing strategies, capacity reservation, and the stocking policies for the supplier and the buyer. We also investigate the optimal inventory decision for the CM to cope with the price discount by considering both demand and delivery uncertainties. Our results suggest that higher production cost accelerates the effects of higher price sensitivity on lowering the optimal capacity and stocking policies in the supply chain. The effect of mean demand error on the optimal prices is relatively marginal compared with that from price sensitivity. We also found that increasing the standard deviation of the random demand does not necessarily increase the stocking level as one would predict. The results show that delivery uncertainty plays an important role in the inventory carried beyond the price break. We discuss potential extensions for future research.     

Endogenous information acquisition in supply chain management

In this paper, we analyze an endogenous determination of efforts put into information acquisition and its impact on supply chain management. More specifically, we consider a supplier who sells a product to a buyer during a single selling season. Prior to placing an order with the supplier, the buyer has an option to acquire additional information about the demand by hiring experts (who are capable of providing forecasts). Because a commission fee must be paid to each hired expert, there exists a tradeoff between the cost and the value of the information, and the buyer needs to determine how much information to acquire. We derive the optimal information-acquisition level in an integrated setting and compare it with that determined in a decentralized setting. We also analyze several types of supply contracts to examine if they can coordinate the supply chain and allow an arbitrary division of system profit between the supplier and the buyer.     

考虑时间和资本因素的多Agent拍卖系统数学模型与数值模拟

创建了一类考虑时间和资本因素的多Agent拍卖系统的数学模型,定义了买方Agent的出价线程和出价函数,具有时间偏好和不同资本大小的买方Agent可采用不同的出价战术,不同的出价战术对各自和效用与系统效用产生不同影响.通过数值模拟,分析了采用不同出众战术下的买方Agent、卖方Agent及系统的效用.     

Optimal Risk-Sharing When Risk Preferences are Uncertain

In many cases, a firm or agency needs a product that only one vendor can supply and for which the final cost is uncertain. An optimal risk-sharing arrangement is sought when the buyer and contractor agree on the probability distribution of cost but the buyer is uncertain of the contractor's risk-preferences. We find that when the buyer and contractor have exponential utilities, the optimal profit arrangement for the higher risk-averse contractor is no longer linear but concave in the costs. The degree of concavity is affected by the probabilistic beliefs on the contractor's risk-preferences. As the more risk-averse contractor becomes more likely, her chosen profit arrangement becomes less concave approaching the ideal, linear arrangement. The less risk-averse contractor is provided a profit arrangement with a certainty equivalent above her reservation price. This is the price the buyer must pay in order to entice a less risk-averse contractor into agreeing to accept a more risky profit arrangement.Another formulation is considered that assumes the buyer and contractor maximize approximations to their certainty equivalents in order to provide a more practical and possibly viable approach to sole-source contracting.     

A game theory approach in seller–buyer supply chain

In this paper, several seller–buyer supply chain models are proposed which incorporate both cost factors as well as elements of competition and cooperation between seller and buyer. We assume that unit marketing expenditure and unit price charged by the buyer influence the demand of the product being sold. The relationships between seller and buyer will be modeled by non-cooperative and cooperative games, respectively. The non-cooperative game is based on the Stackelberg strategy solution concept, where we consider separately the case when the seller is the leader (Seller-Stackelberg) and also when the buyer is the leader (Buyer-Stackelberg). Pareto efficient solutions will be provided for the cooperative game model. Numerical examples presented in this paper, including sensitivity analysis of some key parameters, will compare the results between different models considered.