Inventory control under substitutable demand: A stochastic game application

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AVŞAR Z. M., Baykal-Gursoy M.

NAVAL RESEARCH LOGISTICS, cilt.49, sa.4, ss.359-375, 2002 (SCI-Expanded) identifier identifier

  • Yayın Türü: Makale / Tam Makale
  • Cilt numarası: 49 Sayı: 4
  • Basım Tarihi: 2002
  • Doi Numarası: 10.1002/nav.10018
  • Dergi Adı: NAVAL RESEARCH LOGISTICS
  • Derginin Tarandığı İndeksler: Science Citation Index Expanded (SCI-EXPANDED), Scopus
  • Sayfa Sayıları: ss.359-375
  • Anahtar Kelimeler: stochastic games, inventory control, substitutable demand
  • Orta Doğu Teknik Üniversitesi Adresli: Hayır

Özet

Substitutable product inventory problem is analyzed using the concepts of stochastic game theory. It is assumed that there are two substitutable products that are sold by different retailers and the demand for each product is random. Game theoretic nature of this problem is the result of substitution between products. Since retailers compete for the substitutable demand, ordering decision of each retailer depends on the ordering decision of the other retailer. Under the discounted payoff criterion, this problem is formulated as a two-person nonzero-sum stochastic game, In the case of linear ordering cost, it is shown that there exists a Nash equilibrium characterized by a pair of stationary base stock strategies for the infinite horizon problem. This is the unique Nash equilibrium within the class of stationary base stock strategies. (C) 2002 Wiley Periodicals, Inc.