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A distributed coordination for a single warehouse-multiple retailer problem under private information

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  • Lee, Dong Joo
  • Jeong, In-Jae

Abstract

In this paper, we consider a distributed coordination for single warehouse and multiple retailer problems. The objective is to minimize the sum of the setup cost and inventory holding cost incurring among warehouse and retailers in a distributed manner. We propose two algorithms based on the alternating direction method (ADM) and diagonal quadratic approximation method (DQAM) that utilize Augmented Lagrangian function and multiplier updating scheme. The ADM-based algorithm solves the problem by communicating partial information between a coordinator, the warehouse and retailers. The DQAM-based algorithm does not require a coordinator. The cooperation to minimize the system-wide cost is performed by the direct communication of the warehouse and retailers. The proposed algorithms guarantee 6% deviation from optimal solution in the worst case. The computational experiments and the comparison with existing decentralized approaches are presented.

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  • Lee, Dong Joo & Jeong, In-Jae, 2010. "A distributed coordination for a single warehouse-multiple retailer problem under private information," International Journal of Production Economics, Elsevier, vol. 125(1), pages 190-199, May.
    • Handle: RePEc:eee:proeco:v:125:y:2010:i:1:p:190-199
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    3. Zhai, Xin & Ward, James E. & Schwarz, Leroy B., 2011. "Coordinating a one-warehouse N-retailer distribution system under retailer-reporting," International Journal of Production Economics, Elsevier, vol. 134(1), pages 204-211, November.
    4. Egri, Péter & Váncza, József, 2012. "Channel coordination with the newsvendor model using asymmetric information," International Journal of Production Economics, Elsevier, vol. 135(1), pages 491-499.
    5. Jeong, In-Jae, 2012. "A centralized/decentralized design of a full return contract for a risk-free manufacturer and a risk-neutral retailer under partial information sharing," International Journal of Production Economics, Elsevier, vol. 136(1), pages 110-115.
    6. G. Rius-Sorolla & J. Maheut & S. Estellés-Miguel & J. P. Garcia-Sabater, 2020. "Coordination mechanisms with mathematical programming models for decentralized decision-making: a literature review," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 28(1), pages 61-104, March.

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