Cooperative game analysis of a supply chain with one risk-neutral supplier and two risk-averse retailers
Abstract: This paper considers
a two-echelon supply chain composed of one risk-neutral supplier and two
risk-averse retailers. The retailers obtain production from the supplier and
sell them to the market. Based on the cooperative game theory, the paper studies
the appropriate profit allocation of the supply chain when all the players
cooperate with each other, where the two retailers face a price-sensitive
stochastic demand. The two retailers can either determine their retail prices
independently, or decide whether or not to cooperate with each other.
Design/methodology/approach: To allocate the system-wide profit among
upstream risk-neutral suppliers and two risk-averse downstream retailers, this
paper constructed a cooperative game model, considered as the supermodularity
of the characteristic function and the Shapley value of the game.
Findings and Originality/value: By analyzing the construction’s
cooperative game model, the results show that the profit of the whole supply
chain is the highest in the grand coalition structure. This paper also shows
that the core of our cooperative game is nonempty, and has the supermodularity
property. Based on this, we have computed the Shapley value-based profit
allocation for the whole supply chain in a fair manner.
Originality/value: Although there are a lot of literature examined risk
aversion in a supply chain, but they did not consider using cooperative game to
study this problem. This the first study is in the context of a supply chain
with risk aversion problem.
Author: Changwen Li, Yongwu
Zhou, Yong Lu, Jinsen Guo
Journal Code: jptindustrigg140066
