A Multi-attribute NSS for Purchasing Negotiation

							     A Multi-attribute NSS for
     Purchasing Negotiation


H.-S. SHIH*, H.-J. Shyur, C.-C. Chou
  Tamkang University, Taipei, Taiwan, ROC
              hshih@mail.tku.edu.tw*

              January 7, 2008
                           Hsu-Shih Shih
 Ph.D., Industrial Engineering,
  Kansas State University, USA
 Major Interests
      –   Decision analysis (MODM, MADM, GDM)
      –   Decision support (GDSS, NSS)
      –   Operations research (LP, DP, Network flows)
      –   Soft computing (Neural network, Fuzzy)
     Website
      – http://bluejay.ms.tku.edu.tw (163.13.193.161)


MCDM 2008, Auckland, New Zealand
                                   Outline
    Purpose
    Purchasing
    Negotiation
    Negotiation Support Systems
    Multi-criteria Analysis
    Basic Framework
    Demonstration
    Future Studies

MCDM 2008, Auckland, New Zealand
                                   Purpose
    Implementation of an integrating multi-
     attribute negotiation support system (NSS)
     for purchasing
    Consideration of multiple attributes for
     evaluation instead of single/a few attributes
    Establishment of a platform on Windows-
     based networked PCs for 1 to 1/many
     negotiation for a buyer and vendor(s)

MCDM 2008, Auckland, New Zealand
                                   Purchasing
    The Most Important Activity in Business
      – Over 60% of the amount of total sale, even up to 90%'s
        for Taiwanese manufacturers of notebook computers
      – An opportunity for increasing profits under carefully
        control
    The Most Concerned Attributes
      – Quality (screened)
      – Price, quantity, due date, delivery vehicles, trade credits
    An Efficient Work Being Reached
      – A realization of e-procurement

MCDM 2008, Auckland, New Zealand
                                                          Keeney & Raiffa 1976
                                   Negotiation
    Negotiation
      – A give-and-take interchange among multiple
          participants that proceeds until all agree on a particular
          alternative (or a breakdown occurs to terminate the
          negotiation).
      – Usually not obtaining an optimal solution
    Negotiation Process
      – Negotiation processes are complex and self-organizing
          involving multiplayer, multi-criteria, ill-structured,
          evolving, dynamic problems.
                                                       Holsapple & Whinston 1996
MCDM 2008, Auckland, New Zealand
                                                       Shakun 1993
   Negotiation Support Systems I
    Negotiation support systems (NSS)
      – A (computer-based) system that helps those
          involved in a negotiation to reach an agreement.
      – One special kind of group decision support
          systems (GDSS)




MCDM 2008, Auckland, New Zealand
                                              Holsapple & Whinston 1996
  Negotiation Support Systems II
    General Architecture




MCDM 2008, Auckland, New Zealand
                                   Lei & Feng 2004
Negotiation Support Systems III
    Some Ingredients
      – Issues: the matter of contention; several
          aspects/dimensions
      –   Participants: persons and computers
      –   Acceptance region
      –   Locations: a particular position in an issue space
      –   Strategies: for coalition formation
      –   Movements: locations for moving
      –   Rules of negotiation: for allowed interactions among
          participants
      –   Intervenors: active agents to help participants to reach
          an agreement
MCDM 2008, Auckland, New Zealand
                                                                     Lai 1989
                      Basic Framework
    NSS




MCDM 2008, Auckland, New Zealand
                                        Holsapple et al. 1998
                 Zone of Agreement for
                      Bargaining




MCDM 2008, Auckland, New Zealand
                                         Raiffa 1982
                Trade-offs Strategies
    Time/Resource Dependent
      – Current time versus remaining time
    Behavior Dependent
      – Tit-for-tat
          E.g., cost reducing




MCDM 2008, Auckland, New Zealand             Faratin et al. 1998
        Multiple Criteria Analysis I
    Utility Functions with Risk Tolerance
      – Risk-averse, Risk-neutral, and Risk-seeking
      – Monotonic increasing function (the larger the
        better)
      – Monotonic decreasing function (the smaller the
        better)
      – Bell-shaped function (the more nominal the
        better)

MCDM 2008, Auckland, New Zealand
                                                Keeney & Raiffa 1976
       Multiple Criteria Analysis II
 Unity on Each Dimension
 Weights Obtained from AHP




MCDM 2008, Auckland, New Zealand
                   System Description
    System
      – Windows XP, Asp.net, SQL 2000
      – Computers
    Database
      – 300+ items of electronic parts under three levels for test
    Participants
      – Manufacturer, manufacturer's agent, mediator, vendors,
          vendors' agent


MCDM 2008, Auckland, New Zealand
                        Demonstration I
    Negotiation Condition Settings




MCDM 2008, Auckland, New Zealand
                       Demonstration II
    Negotiation Failure – time limit




MCDM 2008, Auckland, New Zealand
                      Demonstration III
    Negotiation Reached




MCDM 2008, Auckland, New Zealand
                           Future Studies
 English Language Interface
 Application of Critical Items Purchasing
 Prospect Theory Instead of Utility Theory
      – S-shaped value function




MCDM 2008, Auckland, New Zealand
                              Critical Items
    Purchasing Dimensions




MCDM 2008, Auckland, New Zealand               Gelderman & Semeijn 2006
                   Prospective Theory
    S-shaped Curve




MCDM 2008, Auckland, New Zealand        Kahneman & Tversky 1979
                                   References
    H.-J. Shyur, H.-S. Shih (2006), A Hybrid MCDM Model
     for Strategic Vendor Selection. Mathematical and
     Computer Modelling, 44(7-8), 749-761.
    H.-S. Shih, L.-C. Huang, H.-J. Shyur (2005), Recruitment
     and Selection Processes through an Effective GDSS.
     Computers and Mathematics with Applications, 50(10-12),
     1543-1558.
    H.-S. Shih, C.-H. Wang, E.S. Lee (2004), A Multiattribute
     GDSS for Aiding Problem-solving. Mathematical and
     Computer Modelling, 39(11-12), 1397-1412.


MCDM 2008, Auckland, New Zealand
                                   Q&A



 Thank                 you for your comments.




MCDM 2008, Auckland, New Zealand