Allocating Pooled Inventory According to Contributions and Entitlements

Authors

  • Yigal Gerchak Tel Aviv University

DOI:

https://doi.org/10.7494/dmms.2015.9.1.51

Keywords:

inventory pooling, retailers' contributions, entitlements, Nash equilibrium

Abstract

Inventory pooling, whether by centralization of stock or by mutual assistance, is known to be beneficial when demands are uncertain. But when the retailers are independent, the question is how to divide the benefits of pooling.

We consider a decentralized inventory pooling scheme where retailers' entitlements to allocation in case of shortage depend on their contributions to the pool. We derive the Nash equilibrium, and specialize it to symmetric cases.

References

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Gerchak, Y. and D. Gupta (1991). "On Apportioning Costs to Customers in Centralized Continuous Review Inventory Systems" Journal of Operations Management, 10, 546-551.

Gerchak, Y. and G. Schwarz (2014). "Supply Chain Coordination with Multiple Rerailers and Non-Linear Production Costs".

Hartman, B.C., M. Dror and M. Shaked (2000). "Cores of Inventory Centralization Games", Games and Economic Behavior, 31, 26-49.

Montruccio, L., H. Norde, U. Őzen, M. Scarsini and M. Slikker (2002). "Cooperative Newsvendor Games: A Review" Ch. 5 in Handbook of Newsvendor Problems, J. Choi, (ed.), Springer.

Műller, A., M., Scarsini and M. Shaked (2002). "The Newsvendor Game has a non-Empty Core", Games and Economic Behavior, 38, 118-126.

Shao, J., H. Krishnan and S. T. McCormick (2011). "Incentives for Transshipment in a Supply Chain with Decentralized Retailers" Manufacturing and Service Operations Management, 13, 361-370.

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Published

2016-02-17

How to Cite

Gerchak, Y. (2016). Allocating Pooled Inventory According to Contributions and Entitlements. Decision Making in Manufacturing and Services, 9(1), 51–54. https://doi.org/10.7494/dmms.2015.9.1.51

Issue

Vol. 9 No. 1 (2015): Special Issue on Game Theory and Applications

Section

Articles

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Licencja Creative Commons
The content of the journal is freely available according to the Creative Commons License Attribution 4.0 International (CC BY 4.0)

Received 2015-07-15
Accepted 2015-07-15
Published 2016-02-17