Capacity and resource allocation in flexible production networks by a game theory model

In many production applications, plants that produce multiple products with random demands share the required items among suppliers. The decision of how to allocate requests between suppliers to achieve the desired level of customer service is relevant to the efficiency of the production network. The literature highlighted how the long chain has the same level of performance as the full flexible network. This research proposes a decision model based on the game theory model to improve the performance of the production network. The model uses the Gale-Shapley algorithm with low computational complexity to share the demand among the suppliers. A simulation environment allows the evaluation of the proposed model in different conditions, and the model is compared to the dedicated, full flexibility, and long chain models. The numerical results show how the proposed model improves the efficiency of the production environment by keeping the number of connections with the supplier closer to the long chain model.