New application of game theory in supply chain management
Abstract
Game theory has become an essential tool in the analysis of supply chains with multiple players who often have different interests. In this study, we use the game theory to examine the possibility of decision optimization and achieving equilibrium in the operation of the supply chain. Our goal is to determine the optimal agreement between the wholesaler and the retailer(s) to minimize the total cost in the supply chain in the given situation.
The research method used in the study enriches the literature on the topic by linking the minimization of costs not to abstract evaluation metrics but to the stock order item size often calculated in real business as well. This facilitates the interpretation of the strategies and decision motivations used by the members of the supply chain.
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