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Profit allocation games in supply chains

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Abstract

The paper considers a supply chain where a number of agents are connected in some network relationship. Game theory is a very powerful framework for studying decision making problems, involving a group of agents in a supply chain. Allocation games examine the allocation of value among agents connected by a network. The ongoing actions in the supply chain are a mix of cooperative and non-cooperative behavior of the participants. The paper proposes a two-stage procedure for profit allocation based on combination of non-cooperative and cooperative game approaches. In the first stage, retailers meet customer price-dependent stochastic demand and seek to maximize total profit from the sale. Retailers are trying to align goals with producers on a contract basis and share the total profit with them. In the second stage, the cooperating producers allocate individual profits.

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Acknowledgments

The research project was supported by the Grant No. 13-07350S of the Grant Agency of the Czech Republic and by Grant No. IGA F4/19/2013, Faculty of Informatics and Statistics, University of Economics, Prague.

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  1. Faculty of Informatics and Statistics, University of Economics, Prague, Czech Republic

    Petr Fiala

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  1. Petr Fiala
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Correspondence to Petr Fiala.

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Fiala, P. Profit allocation games in supply chains. Cent Eur J Oper Res 24, 267–281 (2016). https://doi.org/10.1007/s10100-015-0423-6

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  • DOI: https://doi.org/10.1007/s10100-015-0423-6

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