Game-Theoretic Modeling of Agents for Supply Chain

Abstract

In this paper, we model a game with complete information with two agents in a supply chain: one supplier - one retailer. The supplier strategy is batches of goods. The retailer provides the supplier with information on demand for goods, the supplier makes a decision on purchasing and delivering batches to the retailer. The supplier manages the inventory, the proposed model is subject to the VMI concept and is a model of cooperation between the supplier and the retailer. The problem is to minimize the cost of a supply chain, in which the optimization variable is the maximum level of product shortages. The problem takes into account product shortages, monetary penalties for shortages, limitations on the supplier's warehouse space, and the number of orders.