Game theoretic approach to supply chain management

This dissertation studies the competitive behavior of firms in supply chain management and revenue management contexts. We analyze capacity allocation and pricing strategies and derive equilibrium solutions for multiple competing firms. We also study channel coordination mechanisms to bring the competing firms together for chain-wide optimality and conduct sensitivity analysis of equilibrium solutions.; First we consider a single-period distribution system with one supplier and two retailers. When a stockout occurs at one retailer the customer may go to the other retailer. The supplier may have infinite or finite capacity. We show that a unique Nash equilibrium exists when the supplier has infinite capacity. While, when the capacity is finite, a Nash equilibrium exists only under certain conditions. We also use the concept of Stackelberg game to develop optimal strategies for both the leader and the follower. In addition to the decentralized inventory control problem, we study the centralized inventory control problem and design perfect coordination mechanisms.; As an extension to the capacity allocation models above, we then consider two firms where each firm has a local store and an online store. We first consider two scenarios of a single-period model and derive the corresponding existence and stability conditions for a Nash equilibrium. We also conduct sensitivity analysis of the equilibrium solution. We then extend our results to a multi-period model where each firm makes simultaneous decisions on its total capacity and the capacity allocation. A myopic solution is derived and is shown to be a Nash equilibrium for this sequential game.; Finally, we consider the pricing strategies of multiple firms providing same service and competing for a common pool of customers in a revenue management context. We use game theory to analyze the systems under both deterministic and general stochastic demand. We derive the existence and uniqueness conditions for a Nash equilibrium and calculate the explicit Nash equilibrium point when the demand at each firm is a linear function of price.