Supply Chain

This article has been accepted for inclusion in a future issue of this journal. Content is final as presented, with the exception of pagination.

IEEE TRANSACTIONS ON SYSTEMS, MAN, AND CYBERNETICS—PART A: SYSTEMS AND HUMANS

1

Due-Date Management Through Iterative Bidding

Chun Wang, Member, IEEE, Zhiguo Wang, Hamada H. Ghenniwa, and Weiming Shen, Senior Member, IEEE

Abstract—This paper proposes an iterative bidding framework

for integrated due-date management (DDM) decision making. We

focus on a type of make-to-order environment in which a firm

needs to quote due dates and prices and to schedule the production

of a variety of job orders required by a large group of customers.

In most cases, customers prefer shorter due dates. However, given

limited production capacity and various cost constraints, the firm

has to balance the attractiveness of its due-date quotations and

the reliability of delivering accepted job orders. The key issue is

how to integrate DDM decisions such that high-quality solutions,

which benefit both the firm and the customers, can be obtained.

We study the integrated DDM in an economic setting where

customers are modeled as self-interested agents and the objective

of the firm is to maximize social welfare. We present an iterative

bidding framework as a decentralized decision support tool which

enables the integration of key DDM decisions. Effective solutions

are achieved through the automated negotiation between the firm

and its customers. We provide analytical results on the application

of the proposed framework to two special cases of the integrated

DDM. We also evaluate the performance of the framework on

general DDM problems through a computational study.

Index Terms—Auctions, bidding languages, due-date management (DDM), iterative bidding, make to order, multilateral negotiation, scheduling.

I. I NTRODUCTION

I

N SUPPLY chain management, the due date of an order

is the promised date that the supplier will...