Toward the fair sharing of profit in a supply network formation

Jean-Claude Hennet and Sonia Mahjoub

International Journal of Production Economics, 2010, vol. 127, issue 1, 112-120

Abstract: The design of a supply chain network can be interpreted as a coalition formation problem in a cooperative game theory and formulated as a linear production game (LPG). The companies that are members of the optimal coalition share their manufacturing assets and resources to produce a set of end-products and globally maximize their profits by selling them in a market. This paper investigates the possibility of combining the requirement of coalition stability with a fair allocation of profits to the participants. It is shown that, in general, the purely competitive allocation mechanism does not exhibit the property of fairness. A technique is proposed to construct a stable and fair allocation system when the core of the game does not exclusively contain a set of competitive allocations.

Keywords: Supply; chain; Cooperative; game; theory; Coalitions; Linear; programming; Duality (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (10)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:proeco:v:127:y:2010:i:1:p:112-120

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