Market-Based Allocation with Indivisible Bids - Agent-Mediated Electronic Commerce - page 63

3 Manufacturing Domain

We evaluate the AON auction in a market-based allocation problem based on the man-
ufacturing scenario sketched in the Introduction. The setting comprises a set of N man-
ufacturing modules , defined as arrangements of manufacturing machines, with capabil-
ities for producing a variety of parts. Each module is controlled by an agent, whose
objective is to maximize profit by operating the module to produce parts fulfilling cus-
tomer orders over an L -day production period. In our market-based model, agents may
increase their individual and collective profit by exchanging orders among themselves,
thus exploiting their comparative advantages and configuration decisions.
We provide a full specification of the model below, describing the goods traded,
utility and cost functions of the manufacturing modules, and the market configuration.
Specific parameter settings for the model, and trading policies implemented by agents
in our simulations, are described in Section 4.

3.1 Goods Traded

The core allocation problem in this domain is deciding which manufacturer will produce
what quantity of each of M types of parts in the current period. The total quantity
demanded of part type r is D r , and initially each agent is given orders for some share of
that demand. Producing part r entitles the manufacturer to a fixed income of I r per unit,
up to the number of units for which it holds orders.
The purpose of the market is to enable trading of orders among manufacturing mod-
ules. The goods traded are the rights to produce parts for orders. A unit of good r ,
therefore, entitles the holder to produce a unit of the corresponding part and receive the
corresponding payment I r from the customer.
Note that the parameter D r bounds the maximum quantity of good r that can be
exchanged at one time, and thus plays the role of C in the definition of the AON auction.

3.2 Agent Objectives

Agents aim to maximize profit, defined as

−

production costs + trading cash flow .

income

Income is simply the total payment for producing parts. Trading cash flow represents
the balance of payments from trading orders with other agents. Production costs include
several components, depending on the quantity and types of parts produced. These are
defined by a set of agent-specific parameters:

- FC i : Fixed cost, a one-time payment if module i produces one or more parts.
- LC i : Labor cost, paid for every day in which the module is in production.
- VC i , r : Variable cost, be paid for each unit of part r that gets produced.
- CF i : Set of possible configurations . Each manufacturing configuration provides dis-
tinct production capabilities. Only one configuration can be used in any given day.
For each configuration f ∈ CF i , each module has: