On Transshipment Games with Identical Newsvendors

TL;DR

This paper analyzes transshipment games among identical newsvendors, focusing on how coalition size influences optimal order quantities and providing formulas for fair profit distribution.

Contribution

It characterizes optimal order quantities and core allocations in transshipment games with identical newsvendors and normally distributed demands.

Findings

Optimal order quantities depend on coalition size.

Closed-form formula for equal core allocation.

Insights into cooperative behavior in supply chains.

Abstract

In a transshipment game, supply chain agents cooperate to transship surplus products. This note studies the effect of size of transshipment coalitions on the optimal production/order quantities. It characterizes these quantities for transshipment games with identical newsvendors and normally distributed market demands. It also gives a closed form formula for equal allocation in their cores.