Mediator assisted simultaneous negotiations with multiple customers for order acceptance decision

Abstract

Purpose The purpose of this paper is to develop a framework for the manufacturer of a make-to-order company to simultaneously negotiate with multiple customers through mediator to achieve order acceptance decisions (OADs). Design/methodology/approach The paper developed mathematical models for the manufacturer, as well as customers to revise their offers during negotiations. Moreover, the paper also proposed a method for the mediator to carry out his assigned duties to assist in negotiation. In the decision process, mediator acts as a bridge between the manufacturer and customers to reach an agreement. A numerical example is enumerated to illustrate the working mechanism and superiority of proposed framework as compared to the framework where simultaneous negotiations are carried out without the presence of mediator. Findings Iterative method of negotiation conducted without mediator leads to delay in reaching agreement as the aspiration level of manufacturer offer and counter-offer of customer will never cross each other. In addition, the party who submits the offer first may suffer as the opponent can take the advantage of his/her offer during negotiation, thereby, derailing the issue of fairness. Introducing mediator between the manufacturer and the customer for their negotiations could overcome these two issues. Numerical analysis clearly illustrates that, in average, the rounds of negotiation to reach an agreement can be reduced by 22 percent using proposed negotiation framework. In addition, the fairness in negotiations can be improved by 33 percent with the incorporation of mediator. Originality/value Through continuing research efforts in this domain, certain models and strategies have been developed for negotiation. Iterative method of negotiations without mediator will help neither the manufacturer nor the customer in terms of fairness and negotiations round to reach an agreement. To the best of the author’s knowledge, so far, this is the first instance of research work in the domain of OAD and negotiation framework that attempts to incorporate mediator for simultaneous negotiation between manufacturer and customers on multiple issues simultaneously.