Coordinating Supply Networks in Customized Mass Production: – A Contract-Based Approach

In the paper we discuss conflicting performance requirements in customized mass production and suggest a novel cooperative planning method for sharing information and coordinating decisions between a focal manufacturer and its suppliers. The method strives to achieve high service level and minimal expected average costs—including production, inventory and potential obsolete inventory costs. A channel coordination mechanism drives the overall system towards its right behavior even though the partners make planning and scheduling decisions autonomously. We present the mechanism and discuss its properties on simulated test cases taken from an industrial case study.