Collaborative Research: Optimization Approach to Collaborative Games in Supply Chain Management

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One of the most important issues in supply chain collaboration is how the participating firms share the cost and benefit. Such an issue can be naturally analyzed using concepts from the cooperative game theory. This project focuses on several fundamental cooperative supply chain games. A variety of relevant key issues for these cooperative games will be investigated, e.g., the existence of the core, computation of core allocations, sensitivity of core allocations to cost parameters, etc. These cooperative games are often multi-stage in nature, and involve demand/supply uncertainties and complex cost structures. These distinct features of supply chain games impose significant challenges. Studies on these games necessitate a variety of new and interesting optimization models. In response, advanced optimization techniques and algorithms need to be developed to analyze these cooperative games. If successful, this project will advance our knowledge in optimization, cooperative games, and supply chain management. The optimization techniques and algorithms developed from this project will be useful not only in analyzing cooperative supply chain games, but also in deepening our understanding of classical supply chain optimization models. Furthermore, this project will provide firms with guidelines to address the cost/benefit allocation issues in supply chain collaboration and ultimately help them improve the efficiency of their supply chains.