‘Available online ot wn scienceirectcom “s5* ScienceDirect [Expert Systems with Applications 36 (2008) 2831-2842 Expert Systems with Applications www aleve comMocatleswa Cooperative capacity planning and resource allocation by mutual outsourcing using ant algorithm in a decentralized supply chain Kung-Jeng Wang**, M.-J. Chen” "Department of Indesrial Menegement, National Taiwan University of Science and Technology, #43, Section 4, ‘Kechong Road, Tipe! 106, Taiwan, ROC Department of indusrial Engineering, Cag Yuan Christan University, Changi, Taiwan, ROC Abstract Lumpy demand forees capacity planners to maximize the profit of individual factories as well as simultancously take advantage of outsourcing from its supply chain and even competitors. This study examines a business model of capacity planning and resource allo cation in which consists of two profitcentered factories. We propose an ant algorithm for solving a set of non-linear mixed integer pro- gramming models of the addressed problem with different economic objectives and constraints of negotiating parties. An individual factory applies specific resource planning policy to improve its objective while borrowing resource capacity from its poet Factory oF lending extra capacity of resources to the other. The proposed method allows a mutually acceptable capacity plan of resources for a sot of customer tasks to be allocated by to negotiating parti, each with private information regarding company objectives, cost and price. Experiment results reveal that near optimal solutions for both of isolated (a single factory) and negotiation-based (between the two factories) environments are obtained. (© 2008 Elsevier Lid, All rights reserved Keywords: Capacity planning; Resouree allocation; Outsourcing; Negotiation and cooperation; Ant algorithm 1. Introduction Lumpy demand forces capacity planners to maximize the profit of an individual factory as well as simultaneously take advantage of outsourcing to its supply chain’s part- ners and even competitors. Although a competitive situa- tion exists among those companies, a collaborative integration for resource and demand sharing is highly attractive to those industries. For instance, in high-tech industries, such as semiconductor and TFT-LCD manufac- turing industries, resources’ cost is the largest expenditure, approximately 60% to 70% of production cost. Thus, rapid response to demands and full sharing of expensive Corresponding author. Tel: +886 2 2 737 6769; fax: +886 2 2.737 sas Email address: kwangi@mail ntostntusted.tw (KJ. Wang) (0957-41798 - se oat matter © 2008 Elsevier Ltd. All ights reserved. hoi10 1014 esa, 200801089 resources among factories are critical to the success against the challenges of short product life cycle, intensive capital investment and marginal profit, Furthermore, capacity planners have to improve the usage of individual factory resources in order to simulta neously optimize the company objectives and fulfill the demands. Traditionally, the planners adjust the capacity ‘of resources to fulfill demands by demand management and capacity planning technologies such as overtime and subcontracting. Among them, resource and order-sharing has becoming one of the significant tools for achieving man- uufacturing flexibility and risk pooling in a supply chain. Unfortunately, conventional capacity models, which only deal with the capacity planning problem for a single factory, failed to properly match such a capacity and order-sharing decision-making requirement among compa- nies. Asymmetric information (ie., resource capacity and22 KJ. Wang, MJ. Chent Expert Systems with Appliatons 36 (2009) 2831-2842 order status) further results in inefficiency on capacity uti- lization and poor profitability for individual factories. As a result, either excess capacity of resources or insufficient resource capacity occurs and leads to high cost as well as reductions in degree of customer service In order to trade-off between low production cost and. high level of service, it is critical for managers to plan capacity of resources from a broader perspective through mutual outsourcing. Such a capacity and order-sharing strategy has been found in many industries such as trans- portation industry with shared carriers, semiconductor manufacturing industry with shared machines, and food production industry with shared outlets, ‘This study proposes an inter-factories capacity planning ‘model between two parties and the corresponding nezotia- tion procedure of resource capacity coping with the unbal- ance between capacity demand and supply of resources. ‘The following issues are the focuses of this stud; 1, What is the best cost-ffectiveness portfolio and alloca- tion of resources to fullill orders? 2. How to develop a mutually acceptable resource alloca- tion plan for individual factories under the information asymmetry? 3. How is the performance of the proposed algorithm for solving this inter-factories capacity problem? Focusing on capacity requirement planning instead of scheduling, this study will propose an inter-factories eapac- ity negotiation framework and solve the capacity planning problem by an ant algorithm, ‘The rest of this paper is organized as follows. Section 2 reviews related work of solution methods for capacity plan- ning and capacity trading. Section 3 proposes several mod- els for resource portfolio problems different objectives. An ant algorithm is developed to solve the prob- lem in Section 4. Section S illustrates the models and exam- ines outsourcing effects under different resource prices. Finally, Section 6 draws conclusions and shows future research directions. 2. Literature survey Modeling and technology-economy trade-off as deciding the best capacity planning inside a single factory is a basis in dealing with this type of problems addressed herein, Only limited studies proposed strategie concepts for equip- ‘ment replacement policy which an alternative term of the capacity planning addressed in the study (c.g., Hsu, 1998; Mayer, 1993; Wang, Chen, & Wang, 2007). Rajagopalan (1994) presented a mix integer linear programming (MILP) ‘model to handle such problem and focusing on a single product. Wang and Lin (2002) developed a capacity plan- ning model for two simultaneous resources. The research of cooperative based resource planning focuses on equilibrium of the system instead of optimality of individuals. There are several studies in the literature directly dealing with capacity trading through autonomous coordination and negotiation among factories. Cachon and Zipkin (1999) addressed competitive and cooperative relationships of factories and their effects in a two-stage sup- ply chain from the perspective of inventory policies. Jiang (2000) proposed a methodology of capacity trading for solv- ing short-term capacity shortage incurred in wafer foundries. Chang (2001) developed a simple Internet-based auction scheme tosell foundry capacity, Theirsystem actsas.acapac- ity manager ofa foundry that automatically negotiated with customers. Huang (2002) proposed a capacity adjustment ‘method to build an agent-based order exchange system. Soft-computing based methods emerge rapidly to attack he resources allocation and expansion problem due 10 trade-off between eficiency and solution quality. Ant algo- rithms are one of recently developed, population-based, heuristic algorithms, Ant algorithms are popular ones due to their capability to solve diserete NP-hard combina- tional optimization problems in a short time. Many ant algorithms are inspired by ant colony optimization (ACO) meta-heuristies such as the Ant-Solver, the ant col- ony system (ACS) (Dorigo & Di Caro, 1999), and the MAX-MIN ant system (MMAS) (Dorigo & Stitzle, 2000) In many industrial situations, ACO algorithm has been shown to offer successful solution strategies for large and complex. problems of production systems. There is & host of literature on scheduling with ant algorithms, Two of the earlier papers that may offer a starting point are den Besten, Stutzle, and Dorigo (2000) Gravel, Price, and Gagn (2002). Ying and Liao (2003) presented an ant colony sys- tem approach for scheduling problems. Merkle and Mid- dendorf (2000) used a combination of two pheromone evaluation methods to find solution of a resource-con- strained project scheduling problem. Elsewhere in the scheduling literature, we found the use of ant colony opti- mization (e.g., Bauer, Bulinheimer, Hart, & Strauss, 2000), Another interesting aspect is that including a constraint hhandiing by local repair into the ant algorithms. Constraint integration with meta-heuristies in general and ACO spe- cifically is an active area of research and many sophisti- cated forms of integration are available. A recent work refers to Meyer and Emnst (2004) and Meyer (2005) Summarizing, the research problems into capacity plan- ning and resource allocation of multiple-factory are stronaly related among members of a supply chain but most of academic studies have solved these problems by centralized model or individually. Only afew studies have offered inter-factories capacity trading framework to sup- port negotiation and cooperation for improving mutual profit; thus, further investigation is promising. 3. Modeling the cooperative capacity planning and resource allocation problem The proposed model is not only dealing with the capacity planning problem for a single factory, but also an inter-factories capacity issue, An inter-factories capacityKod, Wang, Mok. Chen Expert Systems with Applications 36 (2000) 2831-2842 233 planning model is proposed to deal with an unbalanced supply demand environment. Several economic models are developed for individual factories and an inter-factories capacity negotiation model is presented to improve resources utilization among factories by sharing excess capacity of resources and orders. By doing so, social wel- fate is improved without hurting individual benefit. “The negotiation procedure is briely described below: Step 1. The two factories with excess capacity of resources and excess orders search for local optima using the proposed modified ant algorithm, MAA (will state in Section 4) respectively ‘The mediator obins the data regarding excess orders and excess capacity from the two factories The mediator finds out a collaborative capacity plan of resources using MAA. ‘This is @ bargaining step. ‘The capacity seller may increase its resource unit price to maximize its Jocal goal (i.e, total profit in the case). However, this may result in a decreasing capacity demand of the other factory. Step 3 continues and the mediator computes the collaborative capacity plan of resources until the profit equilibrium point is reached. That is, the resource price is acceptable to both factories Step 2. Step 3. Step 4. In order to illustrate the framework, three economic models are illustrated, ie., a capacity planning model with excess capacity, a capacity planning model with excess orders and an inter-factories capacity planning model. ‘The notations of the capacity planning models are defined as following: ay configuration relationship between orders. and manufacturing eels, ay € (0,1) ay=1 if manufacturing cell 1, f= {1,2,-...0}, cam manu- facture order j,j n) ay=0 otherwise dy demand quantity (in pieces) of order jin planning period k, k= {1,2,.- Ph Hy throughput of manufacturing cell ¢ when used to produce order j (in pieces per planning period) W working hours of each period of time uj target utilization of manufacturing cell in period k Gq costs of purchasing manufacturing cell ¢ in period k 1 capital interest rate C, unit price of selling capacity of remaining manu- facturing cells f of a capacity seller Cy capacity selle’s unit price of manufacturing cell 1 to produce capacity buyer's order j (or, equiva- lently, the unit cost of resource usage of the capac- ity buyer) CC upper bound of initial budget R adjustable parameter of price of resource capacity P, unit profit of order j Decision variables in the models are as follows: Mi number of manufacturing cell rin period k sky quantity produced by manufacturing cell / to meet order j in period k by, increment (or decrement) number of manufactur- ing cell ‘from period k — 1 to period k number of remaining manufacturing cell rin peti- od k 44, numberof remaining quantities of order in period k after task allocation of an individual factory is done 4, number of remaining quantities of order j in peri- od k after task allocation is done by an inter-facto- res capacity negotiation model A set of MILP models is presented below, each with individual objectives, to formulate this resource portfolio problem. Two typical models are developed ~ one is for a Factory with excess capacity of resources and the other is for a factory requiring extra capacity for ample orders. Finally, an inter-factories negotiation model is provided. 3.1. Individual factory capacity planning model (a factory with capacity over demand) ‘This model assumes that all demands need to be fulfilled and manufacturing cells reserve certain capacity for sale to ‘gain profit, Investment in new resources is allowed using a finite budget. The goal of the factory is thus ta. maximize the profit of the remaining capacity of manufacturing cells. ‘The model is denoted as model I, Te TEP eG 0 Suse to Sap = dy Cuda o< x oes ae<* ) Maximize 2= 3 Vi @ Nu = Set 0, Vit (4) Lay @ — ay N= Nw So ABH ie = Mi 3 Tia, 6 bu —Nu—Na-ny Vet 6 Nasty) 20,” Nay Ay and dy are of integers @ ‘The objective function (1) maximizes the total profit of the remaining capacity of manufacturing cells. Constraint (2) is capacity balancing equation specifying the allocated quantity (0 each type of cells should be equal to the capac- ity required by the orders. Constraint (3) confines the upper bound of budget. Constraint (4) specifies the capacity limit of manufacturing cells used in each period. Constraint (5) computes the remanding capacity of manufacturing cells. Constraint (6) states the change in the number of machines.2 KJ. Wang, MJ. Chent Expert Systems with Appliatons 36 (2009) 2831-2842 of type 1 from period k— 1 to period k, due to resource replacement. Note that although new purchased resources may have higher efficiency than existing resources, they are also more expensive, A capacity planner thus must determine how to, trade-off between investing in new resources and deploying existing ones to meet delivery dates of order 3.2. Individual factory capacity planning model (a factory with demand over capacity) This model assumes that orders will not be fulfilled except they are profitable. Manufacturing cells may not hhave enough capacity and require outsourcing for extra capacity of resources. Besides, a factory can invest in resources using a finite budget, and phase out old ones, ‘The goal is to maximize the profit by fulfilling orders ‘The model is denoted as model II, 1 SP ty cud yy ®) Maximize 2 wier (ty Subject 10 Satay Sy Vj °) Fas cud evans (10) ween vit (ny $4 =Nu— Naty Vit (12) Minty €Z*, by €Z (13) The objective function (8) is to maximize the profit. Con- straints (9) are the capacity balancing equation ensuring the capacity allocated to each type of manufacturing cell not larger than that required by the orders. The remaining constraints are the same as those in model 3.3. Iner-fuctories capacity planning model The third model is formulated to solve an inter-factories, two-party supply demand negotiation problem. A media~ tor considers both the excess capacity and excess orders of two factories. The goal of the mediator is, from the per- spective of a capacity purchaser through outsourcing, to maximize the net prolit by completing excess orders (d,) using excess capacity (V.,) of the factories. The model is denoted as model Ill, Maximize 2=3> oe ye- Cy) mf! (14) Subject to Pays < dy Vi as) 7 Wisi, ily BO, Vk (16) Nips €2? co) ‘The objective function (14) is to maximize the net profit, ‘The meaning of the other constraints is the same as the cones in models I and Il, In this model, the two individual factories may bargain on cost term (ie, the price of resources, C,,) to reach a deal. 4. Solving the problem by ant algorithm Due to the complexity of problems, this study proposes aan ant heuristic algorithm to find an efficient resource port- folio plan in which the resource investment decision, capi- tal usage plan, resource configuration, and task allocation are determined simultaneously. The algorithm not only reduces the total cost of producing all orders but also improves total profit in a factory level as well as the system level. In many industrial situations, ant algorithm has been shown to offer successful solution strategies for large and complex problems of production systems. In the problem addressed in the study, negotiating parties require to re- examine capacity plans frequently on the base of updated resource prices from its counter party. In this regards, the ant algorithm provides excellent property in dealing with changing parameters 4.1. MAA algorithm ‘The proposed ant algorithm (called MAA) follows the classical ACO algorithmic scheme and improves its efli- by invorpotating & constraint propaga dure for solving the problem, as follows: Procedure: Modified Ant Algorithm (MAA) Begin Set parameters and initialize pheromone trails Sort variables by the most constrained variable rule, Repeat For ¢ from 1 to MaxCycle For m from 1 0 Nans A$ While [4] <|X] Do Select a variable x;€ X that is not assigned in A Choose a value € D(x) with probability Pa({xs0)) using the repair mechanism to guarantee all solutions are feasitl AAU La} End While End For Update pheromone trails using the best ant of cycles (the eycle best) {An If (several cycles pass by) then reinforce pheromone trails using the best ant trial (the global best) 14) End For Until max trials reached End proceKod, Wang, Mok. Chen Expert Systems with Applications 36 (2000) 2831-2842 2835 MAA ranks variables x8 by the most constrained vari- able rule. The ant searching strategy begins with the repair ‘mechanism that allows an artificial ant to construct a com- plete non-violated assignment of values from D(x))(the domain of variable x) to variables xs. A cyele involves a sel of artificial ants, each responsible for a solution of the problem. When all the ants have completed their solution, the eycle is over and the best assignment, Ay (supposed itis performed by the Ath ant), is defined as the eycle best. Fur- thermore, a ‘rial contains several cycles. The best of all the cycle bests, 4, (made by the ant /th) is thus called the trial best or global best. ‘When a new cycle hest is less than the current eycle best, the pheromone on path of the new cyele best is updated. A cecle best is reset to a large number at the each end of rial ‘When a new global best is updated after a lower cycle best is found, the pheromone on the new global best path is also updated. This new global best assignment is used to rein- force the pheromone trails. The algorithm terminated when the maximum number of trials is reached. 4.2. Pheromone and transition probability MAA uses artifical ants to construct a solution (by building a path) on @ graph that is specific to the problem, In this study, the graph is constructed associated with the decision variables, xq in the model. More formally, consider an ant that has already visited a set A of vertices, A= {(vi.t1)s- (4s 0)} which isa set of variable-value pairs that corresponds to the simultaneous assignment of values vj,..0 10 variables x1... %4s respectively. Let xo be the “Start” vertex, xy the first assigned variable and so forth, Supposed that the next selected variable to be assigned is xj, Artificial ants lay pheromone on each vari- able-value pair (x0) in which the graph is G=(V,£) where V=((xpt)[4,€ Xv Dox} and B= {((x 10m), (0) € Poe Dix) ‘445-14, (4p0)) is defined as the amount of phero- mone that represents the learnt desirability of assigning value v to variable xj and value mr to variable x) 1 simulta- neously. Formula (18) states the pheromone intensity of the are between the candidate vertex (xp) and the previ- fous assigned vertex {xj-1,m). ta((yp0)) depends on the pheromone laid on the edge hetween (xj.1) and (x, .m) eAlend) = ler nm (60) (8) Formula (19) defines the probability of transition that aan ant selects vertex (1), [eal (X).0) ona (Xy 0)? X (els wT onalX). WP whe) PaliXi,0)) a) «ris a factor for weighting the pheromone, 2 > 0. The heu- istic term of [14(Xj.0)))* is included and defined as (qi )"(D(x) is the domain of variable x). To set up a low, initial production quantity can meet all the constraints of the problem and find an initial solution for further improvement. Based on our experiments experiences, fis set zero once an initial solution is found. Besides, in the study = 0 as the constraint of 3 yaw = dy is applied (model 1) and B=1 as S25 ays < diy applied (models IL and II. Formula (20) specifies the quantity of pheromone deposited on edge (i, by the Ath ant that has built the best assignment, 4,. TC(4y) is the total cost of kth ant’s assign- ‘ment. The objective function is to maximize total profit, so ‘Ar( 44,4) is proportional to the reciprocal of TC(A,), Atlduyi af = rg EAL a . otherwise At the end of each cycle, the algorithm checks whether the current cycle best is less than the previous cycle best If so, formula (21) is applied to locally update the quantity of pheromone on each edge (ij) according to the best assignment of the kth ant. p is the local evaporation rate, O is the slobal evaporation rate, 0<-< 1. 4y is the ant f with the slobal best in the trial. The cycle best and global best are used to enhance the magnitude of pheromone on the prom- ising trails according to a double-phase elitist strategy that helps artificial ants always select the most promising, arcs, ti) — (9) Hi, + AAI) (22) for all (i,j) (21) 4.3. Constraint propagation procedure The proposed constraint propagation procedure together with the ant algorithm fixes the value domains of the variables that have not yet been searched. Hence, cach artificial ant walks in the search space of feasible solu- tion regions. The procedure uses formulas (2), (9) and (15) to confine values assigned to xjys After a cycle is ended, each ty is assigned a value and Ng, is computed using the ceiling integer of the right hand side of formula (23), > Aigti Nu > > AEH 50, Vive (23) 2a 5. Experiments ‘The parameters of the proposed MAA algorithm were carefully investigated and tuned in a sensitivity analysis. Major parameters include the evaporation rate (p, 7), the number of artificial ant (Nyy), the number of reinforce ‘ment eyeles (RF) and the number of eycles in a trial (C). Table 1 presents the resulting setting of the parameters.286 KJ. Wan, Tablet Seting parameters Vales ® 7 pt oot Na 6 c 1000 RF. 2s ‘This setting is determined by a 2° full factorial design of experiments approach on the six parameters, JAVA language is used to develop the code of the proposed ant algorithm run on a Pé CPU with 256MB RAM. A case with ten types of machines, ten types of orders: ‘and ten periods of production horizon problems are con- oma g a8 iq £4 ssn g son 2000 McJ. Chen! Expert Spstoms with Applications 36 (2009) 2831-2842 sidered to verify the performance of proposed MAA algorithm. $1. Case study of model 1 ‘The available operational time of each manufacturing call, HV, is 1800 h for each period of time. The target utii- zation of each kind of manufacturing cells is 100%, The interest rate is 6% in all periods. The upper bound of bud- turing cells is: Ny= (4,4,4,4,4,4,3,3,3,3) in which each column represents the number of machine in a cell, The unit price of selling capacity of remaining manufacturing lls ¢ of a capacity seller, C, is vet to 1250, 1975, 75, 1350, 2700, 1325, 2350, 2450, 2375, 11,200, respectively, in tis ease. The other data are presented in Appendix A. 3000 1000 S000 CPU time fin seconds) Fig. 1. Fines evolutions of MAA for ease I. Periods Fig. 2. Resource portfolio of case I.KJ, Wang, MJ. Chen Expert Systems with Applications 36 (2000) 2831-2842 ‘The problem is highly complex. ILOG OPL optimiza tion software (2006) was applied but failed to solve the case inh “The best solutions obtained by MAA (in 5000 CPU see- conds) are 3.920 x 10°. Fig 1 depict the evolution of objec- tive values computed by MAA, Fig. 2 is the resulting resource portfolio of machines. 5.2. Case study of model I ‘The initial portfolio of manufacturing cells is (LALAAL 1,111). The unit profits of orders are (20,30,40, 20, 30,40,20, 30,40,40), respectively. The avail- able operational ime, target utilization, interest rate, bud- get are the same as those in case I, The detail data are presented in Appendix B. 000 00 «0800 cru 200 Fig. 3. Fitness evolution Machines Periods Fig, 4. Resource po ass7 ‘The best solutions obtained by MAA (in 20005) are 7.379 x 10’. Fig. 3 displays the evolution of the objective values of the algorithm, Fig. 4 shows the resulting resource portfolio of the manufacturing cals. 53. Case study of model HI ‘The remaining capacity of the manufacturing cells obtained in Section 5.1 and the remaining orders obtained in Seotion 5.2 are used in this case, It is assumed that the capacity unit price (C,) at the capacity seller is propor- tional to y,; by multiplying a ratio R. Note that R=0 imply that resources are free. The other parameters are the sume as the ones in case 1 The algorithms find promising solutions in only a few CPU seconds. Fig. 5 depicts the cost-profit structure for 001200 1600 20 ne (in seconds) 1400 1800 1 of MAA for case I onflios oF ease HL268 KJ. Wan, 300 2500 2000 Protit 02 3 040s a6 MJ. Chen! Expert Spstoms with Applications 36 (2009) 2831-2842 The net proftot capacity demander @ The gros profitor capacity demande (ash) Production cost (b) Fig. 5. Profit structure of different outsourcing cost in R. different resource outsourcing cost (in a ratio of R). As shown in Fig. 5, the gross profit of the capacity buyer decreases as the price of the required capacity. price increases, When R = 1.4 the gross profit converges to zero which means no deal is reached. Note that when R = 0.6, the system will reach balance that the two factories will hhave equal profit, 54. Comparison to other algorithms ‘The author has applied a GA algorithm and compared the performances of the MAA, GA and ILOG OPL with 400.000 350.000 300,000 250.00 Profits 150,000 100,000 50.00 ° 1.100 220 small, executable cases. As shown in Fig. 6, the proposed MAA and GA reach almost the same performance at the end, 6. Comparison of the proposed cooperative capacity planning and resource allocation model to a centralized model In this section, an integrated planning for all the orders and resources of the two factories is performed assuming that there is a centralized decision-maker. The result of such a centralized planning, in terms of profit-sharing structures (effectiveness), serves as a benchmark (ie., the 3300 4400 550 CPU time (in seconds) Fig. 6, Objective funtion evolutions of CPGA, MAA and 1LOG OPLKJ, Wang, MJ. Chen Expert Systems with Applications 36 (2000) 2831-2842 2339 global optimization assuming the existence of a centralized decision-maker) for the comparison with the negotiated results of the two independent parties. Assume that two factories, I and II, coordinate for capacity planning. There are four types of parts committed to customers by each of the two factories. The two factories play as a capacity seller and capacity buyer for its partner. ‘The proposed MILP mathematical model II is applied to both of the two factories and their mediator as well, to search for profit maximization at each level ‘There are ten periods of orders committed to customers by each factory. There are two types of resources for each factory. A factory has a choice to be processed either by alternative machines within the factory or outsoureing (© another factory, whereas the other requires to selling resourees. The other input data include (i) eapacity unit price, Ci, which is proportional to machine throughput (with a mul- tiplier R due to machine's technological level of capacity) It is assumed that the cost of outsourcing is cheaper than that of make-in-factory. (i) The initial resource set, No=(2,1,1,2). The available operation time of each resource, W, is 1800 h forall periods. The target utilization tujof each kind of machine is 100%, The interest rate 1 is (6% in all periods. ‘The price of capacity (of both factories) is increased by multiplying R throughout resource unit prices. The result- ing local, negotiated solutions of the two factories, and the slobally near optimal solution are calculated. The lines of profit in Fig. 7 are numbered in Ll (the global solution), 12 (Factory I+ Factory 1+ Mediator), L3 (Factory 1+ Factory II), and L4 (Factory 1). The solutions of Factories Tand iI are computed by MAA separately, and lines L4 and L3 are then drawn for different values, or equiva- lently resource unit prices. The remaining orders and capacity of the two factories are then matched using 0000 $000) 2000 ° MAA by the mediator for a cooperative capacity plan of resources. Line L2 is depicted by adding the solution values of Factories I, I, and Mediator. Finally, based on the assumption that a centralized decision-maker exists, the same mathematical model is used to compute the global ‘optimum by considering all of orders and capacity of resources. [1 is thus drawn by running the MAA Fig. 7 indicates that (i) the differences between L1 and 12 are small and the proposed cooperative capacity plan- ning and resource allocation model can approach the glob- ally near-optimal model for a broad range of the ‘outsourcing cost, and (ii) the difference between L2 and L3 is the profit gain resulting from cooperation between the cooperative parties. Experimental results revealed that the proposed model and solving method improves total profits for both the isolated (a single factory) and negotia- tion-based (between fctories) environments 7. Conclusions This study has addressed the inter-actories capacity planning and resource allocation problem. We have developed three mixed integer linear programming mod- els with the objective either to minimize the total cost for to maximize the company profit of planning a resource portfolio, Issues that pertain to decisions to pur- chase, sell machines and allocate machines economically to produce orders were resolved. The other contribution of this study is 10 solve this complex resource portfolio problem by proposing a modified ant algorithm with a repair mechanism, which enables artificial ants always walk in feasible solution regions, reducing, computational effort. Furthermore, this study has developed a cooperation- based supply demand orchestration framework in which the issues of coordinated resource allocation between Ls Factory === Leet 1+ Factor TE Li: conatized Mods Fig, 7. Profit share structure for diferent R.240 KJ. Wang, MJ. Chen Expert Systems with Appliatons 36 (2009) 2431-2842 factories tasks can be resolved economically. Experiments reveal that the proposed ant algorithm found good solu- tions in both of isolated (a single factory level) and cooper- ation-based (at a mediator level) environments. Some interesting future work in this field is suggested. In the area of the resource portfolio decision-making in capi- tal-intensive industries such as semiconductor manufactur- ing and testing, alternative means of acquiring resources, such as purchasing new facilities, renting from competitors, further the solution it finds and the efficiency with which it finds them. The proposed model limits two negotiating par- ties. With some extension, our math model and solution can handle capacity planning of multiple-negotiating par- ties. In order to apply it to real supply chain scenarios, a further study for multiple-negotiating parties is encouraged, transferring from other plants and selling equipment, can Appendix A. Data of for case T be incorporated into the model. Beside, the proposed ant algorithm can incorporate local search methods to improve See Tables Al-A4. ‘Table AL Onder demands (dy: te thousands) Periods 1 a 3 oF 05 0% oF oF o on r 6 7 3 4 5 5 2 ° 7 6 2 6 a 3 4 5 5 2 0 7 6 3 6 6 3 4 ® 5 3 o 6 8 4 6 6 3 4 8 5 3 0 6 8 5 5 5 5 4 5 5 3 o 5 5 6 5 5 3 ‘ 5 5 3 30 o 3 7 5 4 5 4 6 6 2 30 o 2 5 5 4 7 4 6 6 2 30 ° 2 9 5 4 7 4 5 6 2 30 o 1 0 5 4 1 4 i 6 2 30 o 1 “Table A2 Procurement cost of machines (cy ten thousand) Periods Mi M2 Ma Ma MS Me Mi Ms Mo. min r 350) 380 300 450 700) 450 rv 300) 0) “400 2 330 580 300 450 00 450 60 500) 650) 400 3 350 550 300 450 0 450 oo 500 650) 400 4 330 580 300 450 00 450 600 500 650) 200 s 350 580 300 450 0 450 oo 500 650) 00 6 330 550 300 450 00 450 600) 500 650) 400 7 350 550 300) 450 m0 450 a 50 650 00 5 380 580 300 450 0 450 600 500 680 00 9 350 550 300) 450) m0 450 ca 50 6st 00 10 330 530 300 450 00 450 600 500) 6st 00 "The unit salvage of each machine x set as bal of procurement com, Table A3 Machine throughput corresponding to orders (ius units) Periods 1 o 03 oF 05 06 o7 on on on Mi 0 0 5 20 M2 . 20 . 25 : “6 . 2s - MB 25 15 2s Ma 30 » 30 Ms 0 0 30 0 0 M6 25 45 » Mr s s . 30 0 . : 0 - 3s Ms x0 0 5 M9 : 2s 8 0 0 = : 0 - - M10 2s 35 10 0KJ. Wang, MJ. Chen! Expert Systems with Applications 36 (2000) 2831-2842 2s Table AS Resultant remaining capacity of machines (N,) Periods Mi M2 MB Me MS Me M? Ms M9 M0 1 ate 19 Me aai@—agl4 3061 122777 «2079 a L341 eo se ee als 3 3am. 242 059228 SBI 28828 2619 4 1738 st ra mom 1 | a L9s2 5 274 216 01732893 2sst 205 2m 2365 ‘ 0309 375) 192s, M078 3S 38H] DMD 25952 aL 7 146 7s i ae a 4 2el 2a 2772301 5 2293 530s 2s 2a SRLS ze 2882277365 ° ce 1 os GF — om 3 26s 1.888 0 2293 lost 2m 4 om a oy arts Appendix B. Data of case 11 See Tables BI-B4. Table BI (Onder demands (ten thousands) Peviods o1 o 8 oF 08 6 o 8 8 O10 T 15 5 ° 2 5 0 1B a 7 6 a 8 7 o 2 5 0 8 5 7 6 a 5 7 o 3 5 0 15 4 6 5 4 5 rt} 3 3 8 0 15 4 6 5 5 5 0 5 0 5 0 15 5 5 4 6 5 0 5 0 5 o 8 5 5 4 1 5 3 ® 0 5 o ry ‘ 4 3 5 o 3 5 7 5 o a 6 4 3 9 0 2 Is 1 5 o 10 1 3 3 0 o 2 5 3 5 o 10 7 3 3 ‘Table B2 Procurement cost of machines (ten thousand) Periods Mil M2 MB Mit Mis M6 Mi Mis M9 M20 T 150 350 300 200 250 300 450 200 450 0 2 130 330 00 200 280 so 450 20 450 40 3 150 350 S00 200 280 son 450 20 450 40 4 130 380 300 20 280 500 450 200 450 400) 5 150 330 S00 200 230 son 450 20 450 0 6 130 380 300 200 280 son 450 200 450 400) 7 150 330 so 200 230 son 450 20 450 0 8 130 330 300 20 290 soo 450 200 450 40 5 150 350 so0 200 250 so 450 20 450 40 0 130 330 S00 200 280 S00 450 200 450 40) Table BS “Machine throughput coresponding to order (units) Periods o1 oD oO oF 05 oO o Of 8 O10 MIL = = = = 20 e 0 = rr} ~ Miz w » 2» » Mi as . - 15 15 7 - 0 - - Mis 0 20 1s MIs 20 25 2s MiG 15 2s = = 20 E 0 = = 2 MI 2 2s s Mis . . - = . 7 7 0 0 2 Mi 25 35 4% M20 25 = 0 = = : 2s - - -22 KJ. 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