Cost allocation in spare parts inventory pooling

In this paper we present the use of game theoretic models to analyse the cost allocation problem in the context of repairable spare parts pooling. Two situations are studied. In the first situation, all pooling members fully cooperate without having self-interest. We use the core concept from cooperative game theory as the basis for designing a fair cost allocation. In the second situation, competition exists as each member has an interest in maximizing his own benefit. Using the concept of Nash equilibrium, we show that the cost allocation policy influences the companies in making their inventory decisions.