Truth-telling in Supply Chain Allocation Mechanisms. Simple Prototype Algorithms
Lazaris A.K., Yannakopoulos P.H. · NATO science for peace and security series. Sub-series E, Human and societal dynamics · 2012
Information asymmetry disintegrates the performance of Supply Chains, by inducing misallocation of the available and potential resources, discriminatory pricing and allocation policies leading to winners and losers in the wealth creation game, arbitrage, lead-times variations and unpredictability. We provide the theoretical underpinning that can reinforce truthful information sharing, that is an incentive compatible mechanism. We focus on scenarios about allocating the capacity of a supplier. The theoretical implementation of the mechanism is presented in the form of SSCC protocols, which comprise truthful inputs of all participants, the computation of allocations on the basis of supplier and retailers' profit maximisation, the non-disclosure of inputs and results. Simple commercial protocols for linear and proportional allocation mechanism will be presented as prototypes.