Production planning and order acceptance in business to business electronic commerce

Following the exponential growth of the Internet and the increasing number of software solutions enabling business-to-business electronic commerce, we study negotiation processes in a make-to-order (MTO) environment. In many industries, the value chain is fragmented both horizontally and vertically and manufacturing firms operate upon a MTO basis. In this application domain, the main decision process consists of interfirm negotiation upon requests-for-quotation distributed by customers and upon bids submitted by suppliers. At the same time, the negotiation process is tightly integrated with production planning and requires appropriate decision-support techniques. This paper discusses in detail the structure for a standardised negotiation process occurring in a multi-enterprise setting and presents three mixed-integer linear programming models that may be used by the different parties involved. (C) 2003 Elsevier B.V. All rights reserved.