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EOR
2010

Repeated newsvendor game with transshipments under dual allocations

13 years 11 months ago
Repeated newsvendor game with transshipments under dual allocations
We study a repeated newsvendor game with transshipments. In every period n retailers face a stochastic demand for an identical product and independently place their inventory orders before demand realization. After observing the actual demand, each retailer decides how much of her leftover inventory or unsatisfied demand she wants to share with the other retailers. Residual inventories are then transshipped in order to meet residual demands, and dual allocations are used to distribute residual profit. Unsold inventories are salvaged at the end of the period. While in a single-shot game retailers in an equilibrium withhold their residuals, we show that it is a subgame-perfect Nash equilibrium for the retailers to share all of the residuals when the discount factor is large enough and the game is repeated infinitely many times. We also study asymptotic behavior of the retailers’ order quantities and discount factors when n is large. Finally, we provide conditions under which a syst...
Xiao Huang, Greys Sosic
Added 25 Jan 2011
Updated 25 Jan 2011
Type Journal
Year 2010
Where EOR
Authors Xiao Huang, Greys Sosic
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