Luis A. Guardiola (Departamento de Métodos Cuantitativos para la Economía y Empresa, Universidad de Murcia), Ana Meca (I.U. Centro de Investigación Operativa, Universidad Miguel Hernández de Elche), Justo Puerto (IMUS, Universidad de Sevilla)
Abstract:
The coordination of actions and the allocation of profit in supply chains under decentralized control plays an important role in improving the profits of retailers and suppliers in the supply chain. We focus on supply chains under decentralized control in which noncompeting retailers can order from multiple suppliers to replenish their stocks. The goal of the firms in the chain is to maximize their individual profits. As the outcome under decentralized control is inefficient, coordination of actions between cooperating agents can improve individual profits. Cooperative game theory is used to analyze cooperation between agents. We introduce multi-retailer-supplier games and show that agents can always achieve an optimal profit by cooperating and forming the grand coalition. Moreover, we show that there will always be stable allocations of total profit among the firms which cannot be improved by any coalition. In addition, we propose and characterize a stable allocation of the total surplus induced by cooperation.