Title

Game-theoretic analyses of decentralized assembly supply chains : non-cooperative equilibria vs. coordination with cost-sharing contracts

Document Type

Journal article

Source Publication

European Journal of Operational Research

Publication Date

7-1-2010

Volume

204

Issue

1

First Page

96

Last Page

104

Keywords

Assembly supply chain, Game theory, Buy-back, Lost-sales cost-sharing

Abstract

This paper considers a multiple-supplier, single manufacturer assembly supply chain where the suppliers produce components of a short life-cycle product which is assembled by the manufacturer. In this single-period problem the suppliers determine their production quantities and the manufacturer chooses the retail price. We assume that the manufacturer faces a random price-dependent demand in either additive or multiplicative form. For each case, we analyze both simultaneous-move and leader-follower games to respectively determine the Nash and Stackelberg equilibria, and find the globally-optimal solution that maximizes the system-wide expected profit. Then, we introduce appropriate buy-back and lost-sales cost-sharing contracts to coordinate this assembly supply chain, so that when all the suppliers and the manufacturer adopt their equilibrium solutions, the system-wide expected profit is maximized.

DOI

10.1016/j.ejor.2009.10.011

Print ISSN

03772217

E-ISSN

18726860

Publisher Statement

Copyright © 2009 Elsevier B.V.

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Full-text Version

Publisher’s Version

Recommended Citation

Leng, M., & Parlar, M. (2010). Game-theoretic analyses of decentralized assembly supply chains: Non-cooperative equilibria vs. coordination with cost-sharing contracts. European Journal of Operational Research, 204(1), 96-104. doi: 10.1016/j.ejor.2009.10.011