An analysis of premium payments as a mechanism for securing preferential service in cloud manufacturing

Andrew Ma*, Aydin Nassehi, Chris Snider

*Corresponding author for this work

Research output: Chapter in Book/Report/Conference proceedingConference Contribution (Conference Proceeding)

1 Citation (Scopus)
184 Downloads (Pure)


Paying a premium in a cloud manufacturing free market environment will benefit a customer during steady state scenarios, however during disruption this benefit diminishes to zero; dependent on the degree of disruption. These customers will recover quicker from disruptions, but the returns are small compared to the relative increase in cost. A cloud manufacturing scenario without contracts or preferential supply acts as a free market, this significantly increases supply chain risk. The predominant mechanism available to mitigate supply chain risk is the willingness to pay a premium. Agent-based simulation modelling experiments investigated this scenario using an extension of anarchic manufacturing for scheduling and control. The experiments induced a disruptive demand-side step change in requirement mix of capabilities and volume demanded by all customers. One customer was willing to pay a significant premium to the others. The waiting time (non-operating time) was analysed as the benefit and indicator for supply chain performance. The job cost for the customer willing to pay a premium relative to other customers and the relative waiting time were analysed during steady state, disruption, and recovery periods.

Original languageEnglish
Title of host publicationProcedia CIRP
EditorsPeter Butala, Edvard Govekar, Rok Vrabič
PublisherElsevier B.V.
Number of pages6
Publication statusPublished - 24 Jun 2019
Event52nd CIRP Conference on Manufacturing Systems, CMS 2019 - Ljubljana, Slovenia
Duration: 12 Jun 201914 Jun 2019

Publication series

NameProcedia CIRP
ISSN (Print)2212-8271


Conference52nd CIRP Conference on Manufacturing Systems, CMS 2019


  • Agent-based simulation
  • Cloud manufacturing
  • Scheduling and control


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