Journal
NAVAL RESEARCH LOGISTICS
Volume 64, Issue 3, Pages 203-216Publisher
WILEY
DOI: 10.1002/nav.21745
Keywords
rationing game; bullwhip effect; reverse bullwhip effect; supply uncertainty; order variance
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Funding
- National Natural Science Foundation of China [71522009, 71202068, 71632007, 71421002, 71210002, 71332005]
- National Science Foundation [CMMI-0726822, CMMI-1265671]
- Tsinghua-Berkeley Shenzhen Institute
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When an unreliable supplier serves multiple retailers, the retailers may compete with each other by inflating their order quantities in order to obtain their desired allocation from the supplier, a behavior known as the rationing game. We introduce capacity information sharing and a capacity reservation mechanism in the rationing game and show that a Nash equilibrium always exists. Moreover, we provide conditions guaranteeing the existence of the reverse bullwhip effect upstream, a consequence of the disruption caused by the supplier. In contrast, we also provide conditions under which the bullwhip effect does not exist. In addition, we show that a smaller unit reservation payment leads to more bullwhip and reverse bullwhip effects, while a large unit underage cost results in a more severe bullwhip effect. (c) 2017 Wiley Periodicals, Inc.
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