Demand and capacity allocation, and subproject allotment in the presence of risk in a collaborative network

The hypercompetitive business environment has enforced the need for enterprises to join a network in order to fulfill customers' demand. In this research the demand and capacity sharing decisions of a collaborative network (CN) have been modeled using proportional and cyclic approaches to evaluate network performance such as total profit (TP) and total orders fulfilled (TOF). The impact in the use of incentives has also been studied to evaluate the improvement of a CN performance. The results indicate that using proportional allocation increases CN TP and TOF by at most 50% compared to cyclic allocation approach. The results also indicates that using proportional allocation with the demand threshold at 10%, TP and TOF increases by 1.5% and 13% higher compared to using cyclic allocation approach with the same threshold level. This research also examines the challenge of subprojects allotment to multiple enterprises susceptible to local and global risk events which may impact the success of a project completion. A general risk model is presented to evaluate how to minimize the project costs. The results indicate that local and global risk events, their associated costs and extended project delays have an influence on the optimal cost of processing a project. This provides an opportunity for enterprises to seek strategies in minimizing controllable risk (e.g., local risks) to reduce the costs expended in a project. Furthermore, an individual enterprise has a higher affinity of being allotted a subproject based on lower risk levels and timely subproject delivery time.