Distribution of surplus generated through cooperation among multiple suppliers and retailers in supply chains
The coordination of actions and the allocation of profit in supply chains play an important role in improving the profits of retailers and suppliers in the chain. We focus on supply chains under decentralized control in which noncompeting retailers can order from multiple suppliers to replenish their stocks. Suppliers' production capacity is bounded. The goal of the firms is to maximize their individual profits. As the outcome under decentralized control is inefficient, coordination of actions between agents can improve individual profits. Cooperative game theory is used to analyze cooperation between agents. We define multi-retailer-supplier games and show that agents can always achieve together an optimal profit and they have incentives to cooperate and to form the grand coalition. Moreover, we show that there always exist stable allocations of the total profit which no coalition can improve. We propose and characterize a stable allocation of the total surplus induced by cooperation.
Keywords: decentralized distribution chains multiple suppliers cooperation stable allocations