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Coordination of perishable crop production using auction mechanisms

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  • Mason, A. Nicholas
  • Villalobos, J. Rene

Abstract

We present a tactical level planning tool to address the issue of coordinating production of perishable specialty crops under decentralized control and incomplete information. The objective of this research is to address an emerging problem seen in the business model of agricultural cooperatives. These vertically expanded farmer associations market their products jointly. However, within the cooperatives farmers remain competitors seeking their own best interest, simultaneously seeking contracts for the most profitable crops in the most desirable part of the season; this behavior can work to the detriment of the group. The model developed considers the problem of asymmetric information and internal competition within the cooperative, as well as traditional factors relevant to agricultural planning. Thereafter, an auction based coordination mechanism is formulated, which leads production decisions toward a coordinated outcome despite each individual acting independently and on his/her best interest. The mechanism is shown to approximate optimal production targets through focused information discovery and a well-structured contract allocation methodology. The results presented show the viability of implementing such planning scheme in practice as well as the optimality gap under a variety of settings.

Suggested Citation

  • Mason, A. Nicholas & Villalobos, J. Rene, 2015. "Coordination of perishable crop production using auction mechanisms," Agricultural Systems, Elsevier, vol. 138(C), pages 18-30.
    • Handle: RePEc:eee:agisys:v:138:y:2015:i:c:p:18-30
    DOI: 10.1016/j.agsy.2015.04.008
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    Citations

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    Cited by:

    1. Gregorio Rius-Sorolla & Julien Maheut & Sofia Estelles-Miguel & Jose P. Garcia-Sabater, 2021. "Collaborative Distributed Planning with Asymmetric Information. A Technological Driver for Sustainable Development," Sustainability, MDPI, vol. 13(12), pages 1-23, June.
    2. Ana Esteso & M. M. E. Alemany & Angel Ortiz & Shaofeng Liu, 2022. "Optimization model to support sustainable crop planning for reducing unfairness among farmers," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 30(3), pages 1101-1127, September.
    3. Adarsh Kumar Singh & Nachiappan Subramanian & Kulwant Singh Pawar & Ruibin Bai, 2018. "Cold chain configuration design: location-allocation decision-making using coordination, value deterioration, and big data approximation," Annals of Operations Research, Springer, vol. 270(1), pages 433-457, November.
    4. Ranjeet Rajput & Sri Vanamalla Venkataraman, 2022. "A violent market price contract for agribusiness supply chain," Annals of Operations Research, Springer, vol. 315(2), pages 1971-1996, August.
    5. G. Rius-Sorolla & J. Maheut & S. Estellés-Miguel & J. P. Garcia-Sabater, 2020. "Coordination mechanisms with mathematical programming models for decentralized decision-making: a literature review," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 28(1), pages 61-104, March.

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