Competition and cooperation in supply chains: Game-theoretic models

Abstract

<p>In this thesis we focus on applications of game theory in supply chain management (SCM). Most significant---and interesting---topics arising in SCM are concerned with the coordination/cooperation and competition among supply chain members. Since the theory of non-cooperative and cooperative games is used for the analysis of situations involving conflict and cooperation, it has become a commonly-used methodological tool in investigating supply chain-related problems.</p> <p>We start with an introduction in Chapter 1. In this chapter, we briefly describe game theory and SCM, and the organizational structure of this thesis. Next, we present a literature review for game theoretical applications in SCM in Chapter 2. This chapter reviews more than 130 papers concerned with supply chain-related game models, which are categorized based on a topical classification scheme. In Chapter 3, we consider a free shipping problem in a B2B setting. We model the problem as a leader-follower game under complete information with a seller as the leader and a buyer as the follower, and compute the Stackelberg solution for this game. In Chapter 4, we analyze the problem of allocating cost savings in a three-level supply chain involving a supplier, a manufacturer and a retailer. We use concepts from the theory of cooperative games to find allocation schemes for dividing the total cost savings among the three members. Chapter 5 considers game-theoretic models of lead-time reduction in a two-level supply chain involving a manufacturer and a retailer. In this chapter, we first develop a leader-follower game where the manufacturer determines the components of his lead-time and the retailer decides on her order quantity. This game is solved to find the Stackelberg equilibrium. We also investigate the cooperation between the two members and design a linear side-payment contract for this supply chain. Our thesis ends with a conclusion in Chapter 6.</p>