Cost Allocation Based on Game Theory in Supply Chain Coordination

In this paper we present the use of game theoretic models to analyze the cost allocation problem in the supply chain coordination. Three game theoretic models are discussed; they are the core, the nucleolus and the Shapley value. We consider how to allocate the cost creating from the supply chain coordination, and the allocation is required to be fair in a certain sense. First, we give the definition of the core, the nucleolus and the Shapley value, and the solution to solve the cost allocation in supply chain. Second, we give a example case to test the model of the cooperation games. To the end, we get some useful suggestion about the cost allocation in supply chain.