Coordination of Supply Chains by Auctions

Supply chain is a decentralized system where material, financial and information flows connect economic agents. There is much inefficiency in supply chain behavior. Recently, considerable attention of researchers is drowned to provide some incentives to adjust the relationship of supply chain agents to coordinate the supply chain, i.e., the total profit of the decentralized supply chain is equal to that achieved under a centralized system. Auctions are important market mechanisms for the allocation of goods and services. A complex trading model between layers of the supply chain is proposed in the paper. The model is based on so called multidimensional auctions. There is possible to formulate multidimensional auctions as mathematical programming problems. Iterative methods are used to solve the problems.