cores of inventory centralization games abstract consider a set of n stores with single item and single period demands assume an option of centralized ordering and inventory with holding and penalty costs only in this case a cooperative inventory centralization game defines allocations of the cost we examine the conditions under which such an inventory centralization game has a nonempty core we prove the existence of nonempty core for demands with symmetric distributions and the existence of nonempty core for joint multivariate normal demand distribution we establish the equivalency of four different nonempty core conditions for the newsboy problem and demonstrate their efficacy for discrete independent and identically distributed iid demands journal of economic literature classification numbers c44 c62 c71

information sharing in dea a cooperative game theory approach abstract in this paper a cooperative dea game is proposed based on the idea that different organizations can gain if they share data on the input consumption and output production of their processing units a larger data sample allows a more complete description of the production possibility set and consequently of the efficient frontier however since not all organizations will benefit in the same way it is convenient to use cooperative game theory in order to share the benefits of the cooperation the proposed cooperative dea game is shown to be subadditive and balanced models for computing the value of the game and checking its stability taking into account the exponential number of coalitions that exist when the number of organizations is large are also presented the approach is illustrated with a dataset from the literature

coalitional game theory approach to modeling suppliers collaboration in supply networks abstract suppliers collaboration is a new paradigm to improve the utilization of collective intelligence in supply networks although existing literature advocates the notion of cooperation in supply networks there is a dearth of studies quantitatively analyzing cost and benefit of cooperation in this study we first develop a model for suppliers dynamic coalition formation using coalitional game theory the proposed cost structure influences the utility of each possible coalition and restricts the coalition size and search space for finding possible coalitions to distribute the profit earned by cooperation in a fair manner a criterion named shared capacity index is developed according to suppliers capacity share in the corresponding coalition a suppliers cooperation algorithm is then proposed to resolve possible conflicts among network members whereby each supplier is able to explore coalitional structures autonomously the efficiency of the proposed approach is evaluated through simulation studies and compared to other solution methods including shapley value and proportional fairness results demonstrate that long term cooperation among suppliers leads to enhanced average individual profit in the network

operations research models for coalition structure in collaborative logistics abstract given a set of players and the cost of each possible coalition the question we address is which coalitions should be formed we formulate mixed integer linear programming models for this problem considering core stability and strong equilibrium the objective function looks for minimizing the total cost allocated among the players concerned about the difficulties of managing large coalitions in practice we also study the effect of a maximum cardinality constraint per coalition we test the models in two applications one is in collaborative forest transportation and the other one in inventory of spare parts for oil operations in these situations collaboration opportunities involving significant savings exist but for several reasons it may be better to group the players in different sub coalitions rather than in the grand coalition the models we propose are thus relevant for deciding how to partition the set of players we also prove that if the strong equilibrium model is feasible its optimal cost is equal to the optimal cost of the core stability model and consequently a coalition structure that solves one problem also solves the other problem we present results that illustrate this property we also present results where the core stability problem is feasible and the strong equilibrium problem is infeasible setting an upper bound on the maximum cardinality of the coalitions allows us to study the marginal savings of enlarging the cardinality of the coalitions we find that the marginal savings of allowing one more player significantly decreases as the bound increases

the newsvendor game has a nonempty core we settle an open conjecture regarding the newsvendor game we prove that its core is always non empty for all possible joint distributions of the random demands we give sufficient conditions under which the core is a singleton or it contains non negative elements

household saving micro theories and micro facts in this survey we review the recent theoretical and empirical literature on household saving and consumption the discussion is structured around a list of motives for saving and how well the standard theory captures these motives we show that almost all of the motives for saving that have been suggested in the informal saving literature can be captured in the standard optimizing model particular attention is given to recent work on the precautionary motive and its implications for saving and consumption behavior we also discuss the behavioral or psychological approach that eschews the use of standard optimization techniques and focuses instead on direct consideration on saving we provide a section on facts who save and how much we then discuss informally the recent decline in the u s saving rate and whether the theory is of much use in understanding this and other changes in aggregate saving rates over time we do not find any convincing explanation for the change in saving rates we also discuss some analyses of saving behavior over the life cycle addressing such questions as whether households save enough for retirement and whether the consumption patterns of older households can be rationalized within a simple life cycle model we also review a great number of studies of the consumption euler equations based on our analysis of the studies cited we conclude that there is still mixed evidence that consumption is excessively sensitive to income we also examine in depth the recent empirical literature on the precautionary motive we conclude that although some households do seem to have a significant precautionary motive at some points in their life cycle this motive is not so strong empirically as some investigators suggest

the irony of state strength comparative responses to the oil shocks in the 1970s like two gigantic waves the oil shocks crested over the advanced industrial world during the 1970s the relatively stable postwar petroleum regime managed by the large oil firms and protected by american diplomatic and military strength collapsed in seven years crude oil prices adjusted for inflation increased more than 500 percent a multitude of national security economic and political challenges confronted the advanced industrial states but unlike war where the threat is observable and lines of conflict quickly become apparent the oil shocks cast up problems that were more insidious problems of energy security economic adjustment and industrial competitiveness these international dilemmas could be defined in various ways and a host of policy responses could be brought to bear upon them

a capacitated single item lot size model abstract wagner and whitin s inventory model is generalized to incorporate a limited production rate the model is conspicuous amongst related models in the literature as wagner and whitin s original algorithm may be applied the result requires restrictions on the cost coefficients that make conventional material requirements planning the model s natural field of application

testing theories of regime change hegemonic decline or surplus capacity two theories explain changes in the international regimes for major economic sectors a theory of hegemonic stability explains sectoral change as a consequence of ebbing hegemony a theory of surplus capacity attributes regime shifts to a serious global problem with excess production capacity in the sector the history of the world automobile industry shows that surplus capacity offers the better prediction and explanation for the timing of regime changes however a synthesis of the two theories is even more satisfactory hegemonic decline is a necessary but not sufficient condition for change surplus capacity in the absence of a hegemon creates the conditions necessary for change

inventory centralization games with price dependent demand and quantity discount consider a distribution system consisting of a set of retailers facing a single period price dependent demand of a single product by taking advantage of the risk pooling effect and the quantity volume discount provided by suppliers or third party carriers the retailers may place joint orders and keep inventory at central warehouses before demand realization and allocate inventory among themselves after demand realization to reduce their operating costs under rather general assumptions we prove that there is a stable allocation of profits among the retailers in the sense that the resulting inventory centralization game has a nonempty core we also show how to compute an allocation in the core

saving and liquidity constraints this paper is concerned with the theory of saving when consumers are not permitted to borrow and with the ability of such a theory to account for some of the stylized facts of saving behavior the models presented in the paper seem to account for important aspects of reality that are not explained by traditional life cycle models copyright 1991 by the econometric society

a theory of dynamic oligopoly iii cournot competition abstract we study the markov perfect equilibrium mpe of an alternating move infinite horizon duopoly model where the strategic variable is quantity we exhibit a pair of difference differential equations that when they exist differentiable mpe strategies satisfy for quadratic payoff functions we solve these equations in closed form and demonstrate that the mpe corresponding to the solution is the limit of the finite horizon equilibrium as the horizon tends to infinity we conclude with a discussion of adjustment costs and endogenization of the timing

subsidized buyer credits atypical results in strategic trade theory using subsidized buyer credit as a policy tool it is shown that the general result of strategic trade policy namely that by committing itself to an export subsidy any government can favorably change the outcome of the cournot oligopoly does not necessarily hold

precautionary savings and the permanent income hypothesis this paper derives the explicit solution of a dynamic stochastic optimal consumption problem for infinitely lived agents whose preferences exhibit in the presence of non diversifiable labour income uncertainty a constant elasticity of intertemporal substitution and constant absolute risk aversion the constancy of the elasticity of intertemporal substitution which implies that marginal utility at zero consumption is infinite guarantees that the non negativity constraint on consumption is never binding along the optimal path the assumption of constant absolute risk aversion allows an explicit computation of human wealth and provides a simple representation of the precautionary savings motive

cooperation between multiple news vendors with transshipments we study a situation with n retailers each of them facing a news vendor problem i e selling to customers over a finite period of time product with a short life cycle such as fashion groups of retailers might improve their expected joint profit by coordinating their orders followed by transshipments after demand realization is known we analyze these situations by defining a cooperative game called a general news vendor game for such a situation with n retailers we concentrate on whether it makes sense to cooperate by studying properties of general news vendor games our main result states that general news vendor games have non empty cores

the control of export credit subsidies and its welfare consequences a two stage bertrand duopoly model demonstrates how the sequence of firm and government actions can explain the origins of export credit subsidies and can affect the welfare consequences of international agreements to adopt subsidy rate ceilings firms act first by stating prices in applications for export credit and can induce positive subsidies by inflating the prices the subsidies transfer rents from governments to firms without changing welfare defined as profits less subsidy expenditures governments become the first to act by adopting subsidy rate ceilings that bind ceilings cause firms to lower prices such that if a positive ceiling binds welfare falls

production inventory games a new class of totally balanced combinatorial optimization games in this paper we introduce a new class of cooperative games that arise from production inventory problems several agents have to cover their demand over a finite time horizon and shortages are allowed each agent has its own unit production inventory holding and backlogging cost cooperation among agents is given by sharing production processes and warehouse facilities agents in a coalition produce with the cheapest production cost and store with the cheapest inventory cost we prove that the resulting cooperative game is totally balanced and the owen set reduces to a singleton the owen point based on this type of allocation we find a population monotonic allocation scheme for this class of games finally we point out the relationship of the owen point with other well known allocation rules such as the nucleolus and the shapley value

growth and risk methodology and micro evidence how exposure to risk affects economic growth is a key issue in development this article quantifies both the ex ante and ex post effects of risk using long running panel data for rural households in zimbabwe it proposes a simulation based econometric methodology to estimate the structural form of a micro model of household investment decisions under risk the key finding is that risk substantially reduces growth in this particular setting the mean capital stock in the sample is in expectation 46 percent lower than in the absence of risk about two thirds of the impact of risk is due to the ex ante effect that is the behavioral response to risk which is usually not taken into account in policy design these results suggest that policy interventions that reduce exposure to shocks or that help households manage risk could be much more effective than is commonly thought

shipment consolidation who pays for it and how much this paper examines the subject of cost allocation in a multiple product inventory system allowing for consolidation of shipments if we order multiple items using an economic order quantity eoq policy and consolidate shipments part of the ordering cost is shared and part is specific to each item we want to find the consolidation choice with optimal total cost and divide the cost fairly among the individual items such a fair division is central to a costing system in which no group of items subsidizes the others there are no free riders we use a cooperative inventory game to determine when this can be done this game is usually not concave so we want to know what consolidation combinations determine when this cost can be fairly divided using the core of the game we prove that consolidation of all the items is cheaper exactly if there are fair cost allocations core of the game is not empty which happens when the portion of the ordering cost common to all items is not too small we further show how sensitive the nonempty core result is to adjustments in the cost parameters and show how to determine a threshold value for the shared ordering cost which assures the existence of a fair cost allocation

precautionary saving a taxonomy of prudence we extend gunning 2010 by analyzing the effect of risk on saving we derive a general prudence index that determines the threshold for the future risk that makes saving increase we relate our results to the utility premium of friedman savage

disciplining trade finance the oecd export credit arrangement the salience of tariffs quotas and other import restrictions in current discussions of trade policy obscures what may well become a more significant form of government intervention subsidized export promotion over the past two decades subsidized trade finance has been one of the most widely used instruments of export promotion this article offers an historical description and a theoretical explanation for the success of the organization for economic cooperation and development oecd export credit arrangement an international regime restricting the provision of subsidized trade finance the explanation emphasizes three factors the structure of government institutions the relative power of states and the functional value of information more generally the analysis demonstrates the inherent weaknesses of monocausal explanations of international cooperation and the advantages of explanations based on a conception of international cooperation as a multistage process each stage of which may be explained by a separate theory

a hybrid milp and benders decomposition approach to find the nucleolus quota allocation for a renewable energy portfolio portfolios of renewable electricity sources are interesting risk management mechanisms for trading in electricity contract markets when formed by players belonging to different companies their stability relies on the way the benefit generated by the optimal portfolio is allocated the challenge of finding a fair and efficient allocation can be mathematically formulated in terms of finding the core of a cooperative game which in turn is stated as an optimization problem with a set of constraints that exponentially grows with the number of participants quickly becoming computationally intractable moreover the right hand side of each constraint relies on a given coalition value which in our case is obtained by a two stage stochastic optimization model this paper presents an efficient methodology based on mixed linear programming and benders decomposition to find the nucleolus share of large scale renewable portfolios case studies are presented with data from the brazilian power system

motives behind purchasing consortia abstract although purchasing cooperation between independent companies has been practiced for a long time the phenomenon is not extensively researched especially purchasing consortiums formed by industrial companies have received relatively little attention in literature of the discipline in this paper the key results of the larger study concerning industrial consortium purchasing are presented the study was recently conducted and tested in finnish machine manufacturing industry the objective of this paper is to find out the motives behind purchasing consortia as foundations for the empirical study three theories explaining why companies form purchasing consortia are presented the results of the study indicate that two main reasons for the companies to cooperate on purchasing are the expected cost savings and the collection of information on supply markets

cooperative game theory approach to allocating benefits of horizontal cooperation abstract logistics costs in general and transportation costs in particular represent a large fraction of the operating costs of many companies one way to try to reduce these costs is through horizontal cooperation among shippers thus when the transportation needs of two or more companies are merged their collective transportation requirements can be met at lower cost the attainable cost savings are due to economies of scale which translate into cheaper rates due to increased negotiation power use of larger vehicles and bundling of shipments in this paper a linear model is presented and used to study the cost savings that different companies may achieve when they merge their transportation requirements on the one hand solving this optimization model for different collaboration scenarios allows testing and quantifying the synergies among different potential partners thus identifying the most profitable collaboration opportunities on the other the problem of allocating the joint cost savings of the cooperation is tackled using cooperative game theory the proposed approach is illustrated with an example in which different cooperative game solution concepts are compared extensive numerical experiments have also been carried out to gain insight into the properties of the corresponding cost savings game and the behavior of the different solution concepts

supply chain coordination perspectives empirical studies and research directions supply chains sc are generally complex and are characterized by numerous activities spread over multiple functions and organizations which pose interesting challenges for effective sc coordination to meet these challenges sc members must work towards a unified system and coordinate with each other a systematic literature review is presented in this paper to throw light on the importance of sc coordination the objectives of this paper are to report and review various perspectives on sc coordination issues understand and appreciate various mechanisms available for coordination and identify the gaps existing in the literature a framework is suggested indicating scope for further research

computing core allocations in cooperative games with an application to cooperative procurement abstract cooperative game theory defines several concepts for distributing outcome shares in a cooperative game with transferable utilities one of the most famous solution concepts is the core which defines a set of outcome allocations that are stable such that no coalition has an incentive to leave the grand coalition in this paper we propose a general procedure to compute a core element or to detect that no core allocation exists which is based on mathematical programming techniques the procedure proposed in this paper can be applied to a wide class of cooperative games where the characteristic function is given by the optimum objective function value of a complex optimization problem for cooperative procurement which is an example from the field of supply chain management where some literature on the core concept already exists we prove the applicability and provide computational results to demonstrate that games with 150 players can be handled

dynamic version of the economic lot size model this article originally appeared in management science october 1958 volume 5 number 1 pp 89 96 published by the institute of management sciences a forward algorithm for a solution to the following dynamic version of the economic lot size model is given allowing the possibility of demands for a single item inventory holding charges and setup costs to vary over n periods we desire a minimum total cost inventory management scheme which satisfies known demand in every period disjoint planning horizons are shown to be possible which eliminate the necessity of having data for the full n periods

risk and savings a taxonomy abstract the effect of risk on savings depends not just on preferences but also on the type of risk this helps to explain why the empirical literature reports positive effects for developed countries but negative effects for developing countries

precautionary saving in the small and in the large the theory of precautionary saving is shown to be isomorphic to the arrow pratt theory of risk aversion making possible the application of a large body of knowledge about risk aversion to precautionary saving and more generally to the theory of optimal choice under risk in particular a measure of the strength of the precautionary saving motive analogous to the arrow pratt measure of risk aversion is used to establish a number of new propositions about precautionary saving and to give a new interpretation of the dreze modigliani substitution effect copyright 1990 by the econometric society