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A Shapley Value Analysis to Coordinate the Formation of Procurement Networks

Chandrashekar, TS and Narahari, Y (2007) A Shapley Value Analysis to Coordinate the Formation of Procurement Networks. In: CASE 2007. IEEE International Conference on Automation Science and Engineering, 2007., 22-25 Sept. 2007 , Scottsdale, AZ .

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In this paper we address the problem of forming procurement networks for items with value adding stages that are linearly arranged. Formation of such procurement networks involves a bottom-up assembly of complex production, assembly, and exchange relationships through supplier selection and contracting decisions. Research in supply chain management has emphasized that such decisions need to take into account the fact that suppliers and buyers are intelligent and rational agents who act strategically. In this paper, we view the problem of procurement network formation (PNF) for multiple units of a single item as a cooperative game where agents cooperate to form a surplus maximizing procurement network and then share the surplus in a fair manner. We study the implications of using the Shapley value as a solution concept for forming such procurement networks. We also present a protocol, based on the extensive form game realization of the Shapley value, for forming these networks.

Item Type: Conference Paper
Publisher: IEEE
Additional Information: Copyright 2007 IEEE. Personal use of this material is permitted. However, permission to reprint/republish this material for advertising or promotional purposes or for creating new collective works for resale or redistribution to servers or lists, or to reuse any copyrighted component of this work in other works must be obtained from the IEEE.
Department/Centre: Division of Electrical Sciences > Computer Science & Automation
Date Deposited: 17 Oct 2011 06:34
Last Modified: 17 Oct 2011 06:34
URI: http://eprints.iisc.ac.in/id/eprint/41473

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