Unformatted text preview: holding cost h is charged for per unit excess inventory (for simplicity, we assume that these costs are the same for all retailers). The retailers may decide to collaborate by placing joint orders before observing the realization of uncertain demand and redistributing inventory among themselves after demand realization. Apparently, the whole system would be better oﬀ due to the risk pooling eﬀect. The question is how the retailers should share the cost. You are asked to formulate this question in a cooperative game framework and show that the core is nonempty. 1...
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This note was uploaded on 09/08/2010 for the course IESE IE411 taught by Professor Xinchen during the Fall '09 term at University of Illinois, Urbana Champaign.
- Fall '09