The Impact of Partial Production Capacity Sharing Via Production as a Service

Cloud manufacturing, one of the trends subsumed under Industry 4.0, influences industrial production settings as it transforms resource utilization into a shared on-demand service. Central to cloud manufacturing is the Production as a Service (PaaS) paradigm, which allows intermediaries to coordinate supply and demand of idle production capacities and enables collaboration in production through outsourcing. Current practical implementations of PaaS use multiple steps to connect buyers and suppliers through an intermediary who treats each demand request individually and subsequently contacts a pool of suppliers. In contrast, we study a novel optimization-based PaaS approach and develop a combinatorial exchange model for production capacity sharing among multiple suppliers and buyers. We adapt the winner determination problem from procurement auction settings with supplier-side bids offering, and buyer-side demands asking for idle production capacities. We use this model to analyze computational times, different market behaviors, and the influence of varying buyer and supplier ratios. We find that key performance indicators such as matched capacity, overall payment, and unfulfilled minimum demand depend on both the employed bidding behavior and the buyer and supplier ratio. We additionally develop a corresponding online algorithm that can be readily implemented in practice and show that the online algorithm yields close to optimal solutions. Finally, we compare the online algorithm with a practice-based benchmark heuristic to show the benefit of our matching approach