Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
481081 | European Journal of Operational Research | 2010 | 6 Pages |
Abstract
We study a supply chain with two independent companies producing an identical product and cooperating through transshipment. Previous studies of this chain show that only under certain conditions, linear transshipment prices could be found that induce the companies to choose the first best production quantities. Moreover, even if such transshipment prices do exist, they result in a unique division of total expected profit and thus they cannot accommodate arbitrary divisions of the profit. Using the Generalized Nash Bargaining Solution, we derive coordinating transshipment prices that always give rise to a coordinating contract for the chain. This contract relies on an implicit pricing mechanism.
Related Topics
Physical Sciences and Engineering
Computer Science
Computer Science (General)
Authors
Behzad Hezarkhani, Wieslaw Kubiak,