A Study on Pareto Optimality of Walrasian Virtual Market

Abstract

Conventional supply chain management (SCM) is not always concerned with optimal solutions in terms of product allocation. Virtual market based supply chain operation solves the product allocation problem by distributing the scheduled resources according to the market prices, which define common scale of value across the various products. We formulate supply chain model as a discrete resource allocation problem, and demonstrate the applicability of the Walrasian virtual market concept with multi-agent paradigm to this framework. In this paper we demonstrate the proposed algorithm successfully calculates Pareto optimal solutions in the supply chain product allocation problem by comparing our method with conventional analytic approaches, such as F constraint method and fixed point algorithm.