Model and Algorithm for Multi-follower Tri-level Hierarchical Decision-Making

Jialin Han, Guangquan Zhang, Jie Lu, Yaoguang Hu, Shuyuan Ma

Abstract: Tri-level decision-making addresses compromises among interacting decision entities that are distributed throughout a three-level hierarchy. Decision entities at the three hierarchical levels are respectively termed as the top-level leader, the middle-level follower and the bottom-level follower. When multiple followers are involved at the middle and bottom levels, the leader’s decision will be affected not only by reactions of the followers but also by various relationships among them. To support such a multi-follower tri-level (MFTL) decision-making process, this study first proposes a general MFTL decision model for the situation involving both cooperative and uncooperative relationships among multiple followers. It then develops a MFTL Kth-Best algorithm to find an optimal solution to the model. Lastly, we use the proposed MFTL decision techniques to deal with a supply chain management problem in applications.