Abstract
Modularization of design and the decreasing time-to-market of new products have placed increased emphasis on Collaborative Product Development (CPD) for success in the global market. We recognize the need for a general framework for design negotiation during CPD. In this research, we propose a principal-agent model for negotiation. The model incorporates a penalty induced negotiation (PIN) mechanism that decomposes the collaborative design into a sequence of decision making stages. The PIN mechanism introduces two types of agents: a principal agent that monitors and controls the iterative negotiation process, and design agents that represent the participants in the collaboration. The principal agent uses a multi-attribute utility based approach to penalize design agents that violate global constraints. The design agents are rational and react to penalties imposed on them by compromising their design in order to satisfy the violated global constraints. We illustrate the use of the mechanism on a pressure vessel design example.