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

Coordinating Contracts in SCM: A Review of Methods and Literature

Supply chain coordination through contracts has been a burgeoning area of re- search in recent years. In spite of rapid development of research, there are only a few structured analyses of assumptions, methods, and applicability of insights in this field. The aim of this paper is to provide a systematic overview of coordinating contracts in supply chain through highlighting the main concepts, assumptions, methods, and present the state-of-the- art research in this field

Coordinating Contracts in SCM: A Review of Methods and Literature

Supply chain coordination through contracts has been a burgeoning area of re- search in recent years. In spite of rapid development of research, there are only a few structured analyses of assumptions, methods, and applicability of insights in this field. The aim of this paper is to provide a systematic overview of coordinating contracts in supply chain through highlighting the main concepts, assumptions, methods, and present the state-of-the- art research in this field

Who's Afraid of Strategic Behavior? Mechanisms for Group Purchasing

We study mechanisms to manage group purchasing among a set of buyers of a given product with a concave purchase cost function. The buyers are cost‐sensitive and willing to buy a range of product quantities at different prices. We investigate two types of mechanisms that can be used by a group purchasing organization (GPO): (a) ordering mechanisms where the buyers, without divulging private information, choose their order quantities and pay for them according to a given cost‐sharing rule or a fixed price; and (b) bidding mechanisms where the buyers announce their valuations for different quantities and the GPO determines their purchase quantities and cost‐shares according to pre‐announced schemes. Under the choice of appropriate cost‐sharing rules, we introduce a sequential joint ordering mechanism and a family of ordering strategies under which some buyers’ strategic deviations never worsen other buyers. We propose a class of bidding mechanisms with some desirable properties and show that a Nash equilibrium bid schedule always exists wherein all buyers’ profits are at least as high as those under truthful bidding. In our proposed mechanisms, some buyers’ strategic deviation from truthful bidding can only make the others better off. Thus, buyers need not worry about strategic behavior of their counterparts. We compare the performances of the system under different mechanisms and show the superiority of our proposed bidding mechanism. We show that the profits generated by our proposed bidding mechanisms under the proportional cost‐sharing rule are never dominated by the maximum profits of the first‐best fixed price

Decentralized subcontractor scheduling with divisible jobs

Subcontracting allows manufacturer agents to reduce completion times of their jobs and thus obtain savings. This paper addresses the coordination of decentralized scheduling systems with a single subcontractor and several agents having divisible jobs. Assuming complete information, we design parametric pricing schemes that strongly coordinate this decentralized system, i.e., the agents’ choices of subcontracting intervals always result in efficient schedules. The subcontractor’s revenue under the pricing schemes depends on a single parameter which can be chosen to make the revenue as close to the total savings as required. Also, we give a lower bound on the subcontractor’s revenue for any coordinating pricing scheme. Allowing private information about processing times, we prove that the pivotal mechanism is coordinating, i.e., agents are better off by reporting their true processing times, and by participating in the subcontracting. We show that the subcontractor’s maximum revenue with any coordinating mechanism under private information equals the lower bound of that with coordinating pricing schemes under complete information. Finally, we address the asymmetric case where agents obtain savings at different rates per unit reduction in completion times. We show that coordinating pricing schemes do not always exist in this case

Optimal design of uptime-guarantee contracts under IGFR valuations and convex costs

An uptime-guarantee contract commits a service provider to maintain the functionality of a customer’s equipment at least for certain fraction of working time during a contracted period. This paper addresses the optimal design of uptime-guarantee contracts for the service provider when the customer’s valuation of a contract with a given guaranteed uptime level has an Increasing Generalized Failure Rate (IGFR) distribution. We first consider the case where the service provider proposes only one contract and characterize the optimal contract in terms of price as well as guaranteed uptime level assuming that the service provider’s cost function is convex. In the second part, the case where the service provider offers a menu of contracts is considered. Given the guaranteed uptime levels of different contracts in the menu, we calculate the corresponding optimal prices. We also give the necessary and sufficient conditions for the existence of optimal contract menus with positive expected profits

Collaborative replenishment in the presence of intermediaries

In complex supply chains, downstream buyers would often replenish individually from intermediaries instead of directly dealing with original manufacturers. Although collaborative replenishment from intermediaries might generate benefits, significant cost reductions could be achieved when direct replenishments from manufacturers are considered. This paper constructs a general model to study collaborative replenishment in multi-product chains with alternative sources of supply—i.e., manufacturers and intermediaries. A collaborative organization determines the optimal choices of replenishment sources on behalf of its members to minimize collective costs. We introduce a class of cooperative games associated with these situations and give sufficient conditions for their concavity. We investigate the choice of allocation rule and its effect on supply chain efficiency when buyers strategically participate in the collaborative organization. We prove that the Shapley value coordinates the supply chain, i.e., it makes complete participation the best strategy for buyers even under asymmetric information. This setting is compared with an alternative structure where buyers can only collaborate in source-specific replenishment organizations that purchase all requested products either from intermediaries or manufacturers. Although there are always participation strategies that result in minimum collective cost, it is impossible to find allocation rules for source-specific replenishment organizations that always motivate the buyers to choose such strategies

Saddlepoints and von Neumann Minimax theorem

This section introduces the basic properties of two-person zero-sum (TPZS) games and presents their general solution concepts

Coordinating contracts in SCM review of methods and literature /

Tyt. z nagłówka.Bibliogr. s. 24-28.Dostępny również w formie drukowanej.ABSTRACT: Supply chain coordination through contracts has been a burgeoning area of research in recent years. In spite of rapid development of research, there are only a few structured analyses of assumptions, methods, and applicability of insights in this field. The aim of this paper is to provide a systematic overview of coordinating contracts in supply chain through highlighting the main concepts, assumptions, methods, and present the state-of-theart research in this field. KEYWORDS: supply chain management, coordination, methodology

Transshipment in decentralized supply chains

Transshipment is the practice of sharing common resources among supply chain members in order to mitigate the risks of uncertain demands. The main theme of this thesis is the transshipment problem in decentralized supply chains. The members of decentralized supply chains are self-interested agents who do not necessarily consider the efficiency of the whole chain, and need contracts that specify the details of their cooperation. We provide a systematic overview of coordinating contracts in supply chains before focusing on three specific questions concerning the decentralized transshipment problem. -- The first problem addressed by this thesis is to find coordinating transshipment contracts for supply chains with two agents. We propose a transshipment contract that always coordinates the general two-agent supply chains. This mechanism relies on an implicit pricing mechanism, i.e. agents initially agree on a formula for setting the transshipment prices, and once quantity decisions have been made and prior to the realization of demands, they fix the transshipment prices. -- The second problem is to find coordinating contracts with a pricing mechanism in supply chains with more than two agents. We propose a mechanism for deriving the transshipment prices based on the coordinating allocation rule introduced by Anupindi et al. (2001). With the transshipment prices being set, the agents are free to match their residuals based on their individual preferences. It has been shown that with the transshipment prices derived from the proposed mechanism, the optimum transshipment patterns are always pair-wise stable, i.e. there are no pairs of agents that can be jointly better off by unilaterally deviating from the optimum transshipment patterns. The third problem pertains to the effects of cooperation costs on transshipment games. Despite its practical relevance, the issue of cooperation costs has not been addressed in the supply chain contracting literature thus far. We study the cooperative transshipment game with symmetric newsvendors having normally distributed independent demands. We provide characterization of optimal individual quantities, the maximum expected profits, and individual allocations for these games. These results, though interesting by themselves, are only a point of departure for studying the games with cooperation costs. We provide conditions for stability (non-emptiness of the core) of these games under two governance network structures. i.e. clique and hub