A Profit Allocation Mechanism for Customer-to-Manufacturer Platform in e-Commercial Business

Abstract

In this paper, the customer to manufacturer (C2M) platform in e-commercial business which connects the customers and the manufacturers is studied. The platform is organized in a centralized collaboration framework where an e-commercial company and multiple manufacturers form a collaborative alliance to satisfy the product orders of multiple customers and maximize a total profit of the alliance. The key issue of the C2M platform is to seek a fair allocation of the profit among the manufacturers. A profit allocation mechanism is proposed for the platform that can assure the stability of the alliance and the sustainability of the platform. The mechanism is based on core allocation and considers each manufacturer’s contribution in fulfilling orders. The effectiveness of the mechanism is evaluated by numerical experiments on 60 instances generated from real data of Alibaba. The experiment results display that the participation of more manufacturers in the C2M platform is profitable. The proposed mechanism can create a profit allocation that keeps in the core in 31 of 60 instances and produce a feasible profit allocation in other 29 instances, which is more reasonable than the current mechanism of C2M platform and easier applied in practice.