Distribution Center Consolidation Games

Flip Klijn and Marco Slikker

No 118, Working Papers from Barcelona School of Economics

Abstract: We study the location-inventory model as introduced by Teo et al. (2001) to analyze the impact of consolidation of distribution centers on facility and inventory costs. We associate a cooperative game with each location-inventory situation and prove that this game has a non-empty core for identical and independent demand processes. Hence, consolidation does not only lower joint costs (Teo et al. (2001)), but it allows for a stable division of the minimal costs as well.

Keywords: Inventory management; cooperative games (search for similar items in EconPapers)
Date: 2004-04
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Working Paper: Distribution Center Consolidation Games (2004)
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