Economic analysis of implementing VMI model using game theory

Vojtech Stehel (), Marek Vochozka (), Tomas Kliestik and Vladimir Bakes ()
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Vojtech Stehel: Institute of Technology & Business in Ceske Budejovice, Czech Republic
Marek Vochozka: Institute of Technology & Business in Ceske Budejovice, Czech Republic
Vladimir Bakes: University of Zilina, Slovak Republic

Oeconomia Copernicana, 2019, vol. 10, issue 2, 253-272

Abstract: Research background: The article deals with implementing VMI between the supplier and customer. To assess whether the system will be implemented, the evolution game theory is used. The contribution is based on the limitations of the study of the evolutionary game theory approach to modelling VMI policies (Torres et al., 2014) and its later extension, The evolutionary game theory approach to modelling VMI policies (Torres & García-Díaz, 2018). It aims is to complement the studies and provide a comprehensive picture of the issue. Purpose of the article: The main objective of the contribution is to respond to the question whether the VMI system will be introduced between the supplier and customer. Methods: In the first phase, the matrix is analysed from the point of view of the game meaning and its limit parameters. The limit parameters are set taking into account the economic reality. The only examined states of the matrix are those where the result is not obvious. For the purposes of the contribution, we work with a 5-year period. A new software capable of calculating evolutionary focus and their stability is created. Sensitivity analysis is carried out for the individual parameters that affect the system behaviour. Findings & Value added: Value added is a complex description of the system and complementation of previous studies in this field. VMI is confirmed. The results obtained can be used for practical management, so that the managers are able to identify what the actual costs are and what the probability of introducing the sys-tem is. At the same time, they can identify the parameters that can be influenced by them and observe their impact on the shift of the system introduction probability.

Keywords: VMI; game theory; sensitivity analysis (search for similar items in EconPapers)
JEL-codes: L91 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (3)

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