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.

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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