The single-supplier multi-retailer joint replenishment game can be stated as follows: a number of independent retail facilities know demands of a single product. They order goods from the same supplier. All shipment from supplier's warehouse to retailers are direct. Both of transportation costs and linear inventory holding costs are supported by the retailers.
A group of retailers would like to form and alliance and replenish their inventory jointly to save on delivery costs. Now, the questions are:
1. Which are the alliances that are more likely to be formed?
2. How should the retailers fairly apportion their achieved savings?
1. Best way may be based on the neighbourhood or vicinity of each other
2. Depend on the quantity each one of them buy + cost for average of the total transportation cost,
Dear Asela,
Thank you for your response.
Could you kindly recommend me some paper related to this topic?
https://archive.nyu.edu/bitstream/2451/26277/2/07-03.pdf
http://pubsonline.informs.org/doi/pdf/10.1287/opre.1110.1000
http://kam.mff.cuni.cz/~sgall/ps/jrp-apx.pdf
Thanks again, especially for
"Cost allocation for joint replenishment models" paper.
I have no experience with the class of cooperative inventory games. Computation seems to be the challenge and one interesting question is the conditions under which such games are concave. In that case, the Shapley value (a natural candidate for cost sharing) belongs to the core. The nucleolus is an alternative sharing rule which is however much harder to compute, especially in that context. Furthermore, its lack of monotonicity is a drawback.
Dear Anna,
Achieving consistent and acceptable cost structures to satisfy all retailers is a great problem to the alliance. More so, satisfying all demands without backlogging poses a great challenge; especially for items with demand uncertainty.
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