Evaluating strategic issues in supply chain scheduling using game theory

Abstract

This paper deals with the problem of scheduling and batch delivery of orders in a supply chain (SC) including a supplier, a manufacturer and a final customer. First, the individual decisions of partners in the SC and their behaviours are analysed through mathematical models. Second, the best policy is obtained assuming that the SC is vertically integrated and the partners fully cooperate (this is called SC scheduling in the relevant literature). Since this strategy is usually against a partner, it might not be implemented in practice as the authors have observed this condition in real world. Hence, a fair sharing mechanism based on game theory concepts is also introduced which can motivate the partners to cooperate and adopt the best policy of the SC. The numerical examples show the superiority of integrated decisions over independent actions and also the importance of the sharing mechanism.

Keywords:

• supply chain scheduling
• batch delivery
• game theory
• sharing mechanisms