A Game Theoretic Model to Manufacturing Planning with Single Manufacturer and Multiple Suppliers with Asymmetric Quality Information

In this paper, we propose a game theoretic model to coordinate single manufacturer and multiple suppliers under demand uncertainty with asymmetric quality information. The paper addresses the manufacturer and its suppliers who are involved in purchasing and production with uncertain demands. Due to asymmetric information, the quality information of components purchased from suppliers is unknown to the manufacturer. Thus, we investigate two scenarios for the manufacturer to estimate uncertainty of risk. The coordination problem is modeled by Stackelberg game where the manufacturer is the leader and suppliers are followers. An optimization approach is proposed to find an equilibrium under demand uncertainty. Computational results show the effectiveness of the proposed approach.