On Transshipment Games with Identical Newsvendors

In a transshipment game, supply chain agents cooperate to transship surplus products. This note studies the effect of size of transshipment coalitions on the optimal production/order quantities. It characterizes these quantities for transshipment games with identical newsvendors and normally distributed market demands. It also gives a closed form formula for equal allocation in their cores

A review of non-cooperative newsvendor games with horizontal inventory interactions

There are numerous applications of game theory in the analysis of supply chains where multiple actors interact with each other in order to reach their own objectives. In this paper we review the use of non-cooperative game theory in inventory management within the newsvendor framework describing a single period inventory control model with the focus on horizontal interactions among multiple independent newsvendors. We develop a framework for identifying these types of horizontal interactions including, for example, the models with the possibility of inventory sharing via transshipments, and situations with substitutable products sold by multiple newsvendors. Based on this framework, we discuss and relate the results of prior research and identify future research opportunities

Cooperation in Supply Chain Networks: Motives, Outcomes, and Barriers

This paper analyzes the phenomenon of cooperation in modern supply chains in the light of Game Theory. We first provide a discussion on the meaning of cooperation in supply chains, its motives, outcomes and barriers. We then highlighted the applicability of Cooperative Game Theory as methodology for analyzing cooperation in supply chains. Second, we review recent studies that analyze the cooperation in supply chains by means of cooperative game theory. A special emphasis will be given inventory centralizations games. Finally, gaps in the literature are identified to clarify and to suggest future research opportunities

On the Convexity of News Vendor Games

This study considers a simple newsvendor situation that consists of n retailers, all selling the same item with common purchasing costs and common selling prices.Groups of retailers might increase their expected joint profit by inventory centralization, which means that they make a joint order to satisfy total future demand.The resulting newsvendor games are shown to have non-empty cores in the literature.This study investigates convexity of newsvendor games.We focus our analysis on the class of newsvendor games with independent symmetric unimodal demand distributions after providing several examples outside this class that are not convex.Several interesting subclasses, containing convex games only, are identified.Additionally, we illustrate that these results can not be extended to all games in this class.game theory;inventory centralization;newsvendor;convexity

A General Framework for Cooperation under Uncertainty

In this paper, we introduce a general framework for situations with decision making under uncertainty and cooperation possibilities. This framework is based upon a two stage stochastic programming approach. We show that under relatively mild assumptions the cooperative games associated with these situations are totally balanced and, hence, have non-empty cores. Finally, we consider several example situations, which can be studied using this general framework.Two-stage stochastic programming;cooperative game theory;core

A General Framework for Cooperation under Uncertainty

In this paper, we introduce a general framework for situations with decision making under uncertainty and cooperation possibilities. This framework is based upon a two stage stochastic programming approach. We show that under relatively mild assumptions the cooperative games associated with these situations are totally balanced and, hence, have non-empty cores. Finally, we consider several example situations, which can be studied using this general framework.

Stability and monotonicity in newsvendor situations

Cataloged from PDF version of article.This study considers a supply chain that consists of n retailers, each of them facing a newsvendor problem, and a supplier. Groups of retailers might increase their expected joint profit by joint ordering and inventory centralization. However, we assume that the retailers impose some level of stock that should be dedicated to them. In this situation, we show that the associated cooperative game has a non-empty core. Afterwards, we concentrate on a dynamic situation, where several model cost parameters and the retailers’ dedicated stock levels can change. We investigate how the profit division might be affected by these changes. We focus on four monotonicity properties. We identify several classes of games with retailers, where some of the monotonicity properties hold. Moreover, we show that pairs of cooperative games associated with newsvendor situations do not necessarily satisfy these properties in general, when changes in dedicated stock levels are in concern

Supply Chain Coordination under Advance-purchase Discount Contract with Sales Effort and Transshipment

In today’s business environment, a competition is no longer about competing between firms, but between supply chains. Improving supply chain’s performance has become necessary for companies to survive. Supply chain coordination ensures a maximumperformance of a supply chain. This dissertation studies impacts of an advance-purchase contract and supply chain coordination in two different supply chains.We first consider the supply chain with the manufacturer and retailer who can exert sales effort to stipulate demand. We develop the contract that combines the advance-purchase contract and the target rebate contract to coordinate the retailer’s ordering and effort decisions. We analytically show that supply chain coordination is achievable, but profit splitting may not be fully flexible depending on market conditions.We second consider the supply chain with the manufacturer and two retailers who can transship products to satisfy unmet demand as a result of an inventory shortage. We establish a new mechanism that integrates the advance-purchase contract to coordinate the supply chain. The coordination mechanism follows in two steps: it first aligns the objective of the retailer group with the objective of the supply chain, and second aligns the individual objective of each individual retailer with the joint objective of the retailer group. We analytically show that supply chain coordination and arbitrary profit split is achievable.The coordinating contracts lead to Pareto improving situations. The numerical analyses show the performance improvement of the supply chain from the inclusion of the advance-purchase contract. We also conduct the sensitivity analyses to see the impacts of the contract terms on the retailers’ optimal decisions, and the impacts of market conditions on the contracts. The potential future research directions for both studies are also discussed.Industrial Engineering & Managemen