Supply chain inventory management via a Stackelberg equilibrium

Yeong-Cheng Liou; Siegfried Schaible; Jen-Chih Yao

doi:10.3934/jimo.2006.2.81

Article Contents

2006, Volume 2, Issue 1: 81-94. Doi: 10.3934/jimo.2006.2.81

This issue Previous Article Optimal control for resource allocation in discrete event systems Next Article Two-person zero-sum linear quadratic stochastic differential games by a Hilbert space method

Supply chain inventory management via a Stackelberg equilibrium

1.
Department of Information Management, Cheng Shiu University, No.840, Chengcing Rd., Niaosong Township, Kaohsiung County 833, Taiwan, R.O.C.
2.
A. G. Anderson Graduate School of Management, University of California, Riverside, CA 92521
3.
Department of Applied Mathematics, National Sun Yat-Sen University, Kaohsiung, Taiwan 80424, R.O.C.

Received: July 31, 2005

Revised: October 31, 2005

Published: December 2005

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Abstract

In this paper we consider one-buyer, one-seller, finite horizon, multi-period inventory models in which the economic order quantity is integrated with the economic production quantity (EOQ-EPQ in short). We introduce the Stackelberg equilibrium framework in which the objective is to maximize the vendor's total benefit subject to the minimum total cost that the buyer is willing to incur. Some existence results, optimality conditions and the optimal replenishment policy under the Stackelberg equilibrium concept are obtained and a numerical algorithm and examples are presented to find the optimal replenishment policy in practice.

Keywords:

Inventory models,
Stackelberg equilibrium,
economic order quantityeconomic production quantity.

Mathematics Subject Classification: MSBM10.

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