Work

A Stochastic Programming Duality Approach to Inventory Centralization Games

Year: 2009

Type: article

Abstract: In this paper, we present a unified approach to study a class of cooperative games arising from inventory centralization. The optimization problems corresponding to the inventory games are formulated as stochastic programs. We observe that the strong duality of stochastic linear programming not only directly leads to a series of recent results concerning the nonemptiness of the core of such games, but also suggests a way to find an element in the core. The proposed approach is also applied to inventory games with concave ordering cost. In particular, we show that the newsvendor game with concave ordering cost has a nonempty core. Finally, we prove that it is NP-hard to determine whether a given allocation is in the core of the inventory games even in a very simple setting.

Source: Operations Research

DOI: 10.1287/opre.1090.0699

Authors: Xin Chen, Jiawei Zhang

Institutions: University of Illinois Urbana-Champaign, New York University

Language: English

Topic: Supply Chain and Inventory Management

Subfield: Management Information Systems

Field: Business, Management and Accounting

Domain: Social Sciences

Open Access status: green

Funders: National Science Foundation, Division of Civil, Mechanical and Manufacturing Innovation

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