Game-theoretic analyses of decentralized assembly supply chains: Non-cooperative equilibria vs. coordination with cost-sharing contracts |
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Authors: | Mingming Leng Mahmut Parlar |
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Institution: | 1. Department of Computing and Decision Sciences, Lingnan University, 8 Castle Peak Road, Tuen Mun, Hong Kong;2. DeGroote School of Business, McMaster University, Hamilton, Ontario, Canada L8S 4M4 |
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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. |
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Keywords: | Assembly supply chain Game theory Buy-back Lost-sales cost-sharing |
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