ALLOCATION GAME IN A SINGLE PERIOD SUPPLY CHAIN MODEL

This paper considers a simple supply chain in which a single supplier sells to several downstream retailers and he may distinguish various retailers’ demand by giving more importance to satisfying some categories of demand than others. The supplier has limited capacity. If the retailer orders exceed available capacity, the supplier allocates capacity using publicly known mechanism. After allocation if the supplier is left with inventory he can reallocate the demand. An algorithm has been developed for reallocation of demand using different allocation mechanism. It has been shown numerically, how reallocation mechanism can benefit the retailers as well as supplier causing higher supply chain profits. Further, we have tried to evaluate whether a retailer should use truth-inducing mechanism or he should use manipulable mechanism to increase his profit.