Decentralized Decision-making for Reverse Production Systems

Abstract

Reverse production systems are often comprised of several tiers with independent members competing at each tier. This research develops and designs a decision-making process for decentralized reverse production systems where each participant in the network determines its decisions in a self-interested way. This dissertation includes three major parts. The first part develops a prototype model for a decentralized reverse production system with two tiers, collectors and processors, focusing on the coordination of transactions of recycled items between these two tiers. The collectors determine the individual material flow allocation mechanisms, based on predictions of the range of prices from the processors, that relate the flow amount to the overall vector of acquisition prices that will be offered by the processors to all the collectors. The processors compete for the flow from the collectors and reach an equilibrium state where no entity is willing to change its decisions. In the second part, we extend the prototype model for a general multi-tiered recycling network comprised of the upstream boundary tier, several intermediate tiers, and the downstream boundary tier where each of the tiers has multiple independent entities. Recycled items flow from the top tier to the downstream tier, but acquisition prices are set from the downstream tier back to the upstream tier. Finally the third part provides a comparison of centralized and decentralized models for reverse production systems and addresses several numerical insights of different system subsidy schemes.