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      Non-cooperative joint replenishment under asymmetric information

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      Author
      Körpeoğlu, E.
      Şen, A.
      Güler, K.
      Date
      2013
      Source Title
      European Journal of Operational Research
      Print ISSN
      0377-2217
      Electronic ISSN
      1872-6860
      Publisher
      Elsevier
      Volume
      227
      Issue
      3
      Pages
      434 - 443
      Language
      English
      Type
      Article
      Item Usage Stats
      116
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      Abstract
      We consider jointly replenishing n ex-ante identical firms that operate under an EOQ like setting using a non-cooperative game under asymmetric information. In this game, each firm, upon being privately informed about its demand rate (or inventory cost rate), submits a private contribution to an intermediary that specifies how much it is willing to pay for its replenishment per unit of time and the intermediary determines the maximum feasible frequency for the joint orders that would finance the fixed replenishment cost. We show that a Bayesian Nash equilibrium exists and characterize the equilibrium in this game. We also show that the contributions are monotone increasing in each firm's type. We finally conduct a numerical study to compare the equilibrium to solutions obtained under independent and cooperative ordering, and under full information. The results show that while information asymmetry eliminates free-riding in the contributions game, the resulting aggregate contributions are not as high as under full information, leading to higher aggregate costs.
      Keywords
      Economic Order Quantity model
      Information asymmetry
      Joint replenishment
      Non-cooperative game theory
      Economic order quantity models
      Information asymmetry
      Inventory
      Economic analysis
      Game theory
      Industry
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      http://hdl.handle.net/11693/21085
      Published Version (Please cite this version)
      http://dx.doi.org/10.1016/j.ejor.2013.01.004
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      • Department of Industrial Engineering 677
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