Decentralized subcontractor scheduling with divisible jobs

Subcontracting allows manufacturer agents to reduce completion times of their jobs and thus obtain savings. This paper addresses the coordination of decentralized scheduling systems with a single subcontractor and several agents having divisible jobs. Assuming complete information, we design parametric pricing schemes that strongly coordinate this decentralized system, i.e., the agents’ choices of subcontracting intervals always result in efficient schedules. The subcontractor’s revenue under the pricing schemes depends on a single parameter which can be chosen to make the revenue as close to the total savings as required. Also, we give a lower bound on the subcontractor’s revenue for any coordinating pricing scheme. Allowing private information about processing times, we prove that the pivotal mechanism is coordinating, i.e., agents are better off by reporting their true processing times, and by participating in the subcontracting. We show that the subcontractor’s maximum revenue with any coordinating mechanism under private information equals the lower bound of that with coordinating pricing schemes under complete information. Finally, we address the asymmetric case where agents obtain savings at different rates per unit reduction in completion times. We show that coordinating pricing schemes do not always exist in this case

Can brands claim ignorance? Unauthorized subcontracting in apparel supply chains

Unauthorized subcontracting—when suppliers outsource part of their production to a third party without the retailer’s consent—has been common practice in the apparel industry and is often tied to noncompliant working conditions. Because retailers are unaware of the third party, the production process becomes obscure and cannot be tracked. In this paper, we present an empirical study of the factors that can lead suppliers to engage in unauthorized subcontracting. We use data provided by a global supply chain manager with more than 30,000 orders, of which 36% were subcontracted without authorization. We find that the frequency of unauthorized subcontracting across factories has a pronounced bimodal distribution. Moreover, the degree of unauthorized subcontracting in the past is highly related to the probability of engaging in unauthorized subcontracting in the future, which suggests that factories behave as if they choose a strategic level of unauthorized subcontracting. At the order level, we find that state dependence (i.e., the status of an order carrying over to the next one) and price pressure are the key drivers of unauthorized subcontracting. Buyer reputation and lead time also play a role. Finally, we show that unauthorized subcontracting can be predicted correctly for more than 80% of the orders in out-of-sample tests and for about 70% of suppliers. This indicates that retailers can use business analytics to predict unauthorized subcontracting and help prevent it

Modelling and analysis of a network organization for cooperation of manufacturers on production capacity

We present an analytical model to analyze the operation of a productive cooperation network where producers cooperate on production capacity. Producers have limited capacity and have access to subcontractors at a higher cost. A single-unit auction-based allocation mechanism is proposed to allocate an arriving order based on the producers' cost structures and their current loads to maximize the total profit. We show that when the costs are private information, producers are willing to cooperate in order to increase their expected profit. Furthermore, it is shown that there is an equilibrium where producers bid their actual costs. The cooperation can also generate extra profit to cover a part of its operating expenses with this allocation mechanism. A continuous-time Markov chain model is utilized to evaluate the performance of the allocation mechanism where producers submit their myopic best response bids. The cooperation case is also compared with the no-cooperation case and also with the centralized operation of producers

Research on the mobility behaviour of Chinese construction workers based on evolutionary game theory

The Chinese construction industry is characterised by the frequent job changes of lower-level workers, which has been identified as one of the principal causes of poor performance, quality and safety accidents, and high technology loss in the construction industry. Assuming that each party has incomplete market information about the other, we can thus define a dynamic game relationship between employers’ incentives to retain workers and workers’ mobility behaviour. By using evolutionary game theory, in this study we analyse various conditional evolutionary stable strategies and explore how employer behaviour influences the mobility of the workers in this industry in China. The results show that under the prevailing employment model, construction workers are bound to change jobs regardless of whether their employers adopt incentives to retain them or not. This finding suggests that the government, as the market regulator, should reform its employment model to ensure that construction workers switch jobs in an orderly and rational manner

Modeling Industrial Lot Sizing Problems: A Review

In this paper we give an overview of recent developments in the field of modeling single-level dynamic lot sizing problems. The focus of this paper is on the modeling various industrial extensions and not on the solution approaches. The timeliness of such a review stems from the growing industry need to solve more realistic and comprehensive production planning problems. First, several different basic lot sizing problems are defined. Many extensions of these problems have been proposed and the research basically expands in two opposite directions. The first line of research focuses on modeling the operational aspects in more detail. The discussion is organized around five aspects: the set ups, the characteristics of the production process, the inventory, demand side and rolling horizon. The second direction is towards more tactical and strategic models in which the lot sizing problem is a core substructure, such as integrated production-distribution planning or supplier selection. Recent advances in both directions are discussed. Finally, we give some concluding remarks and point out interesting areas for future research

Who Gets What, When, How? Power, Organization, Markets, Money and the Allocation of Resources

Money is a mystery and financial institutions are often regarded as guardians and promoters of the mystery. These sketches are designed to help an individual interested in, but not technically trained in economics, understand markets, money, credit and the evolution of a mass market system embedded in the rich context of its political environment and society. The efficient functioning of a dynamic economy requires the presence of money and financial institutions. The great variety of financial institutions in any advanced economy requires that a synthetic approach is used to understand what the whole looks like. Verbal description provides an overarching view of the mixture of history, law, philosophy, social mores, and political structure that supplies the context for the functioning of the economy. This has been vividly illustrated by Adam Smith, his teacher the Reverend Francis Hutcheson and his close friend David Hume. There are two different but highly allied themes in this single slim volume. Chapters 1, 2, and 3 supply the rich context of history, society, polity and law in which every economy is embedded. Chapters 12 and 13 sketch what might lie ahead given the current state of the world. These chapters require no symbols or technical depth. In contrast Chapters 4 to 11 offers a reasonably nontechnical exposition of some of the considerable development in formal economic theory pertaining to money and financial institutions as economics struggles towards emerging as a science, balancing quantitative measures with qualifications that help to explain what the numbers mean