Cost allocation in spare parts inventory pooling |
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| Institution: | 1. Innovative Manufacturing Research Centre, Cardiff University, Aberconway Building, Colum Drive, Wales CF10 3EU, UK;2. Centre for Industrial Management, Katholieke Universiteit Leuven, Celestijnenlaan 300 A, B-3001 Heverlee, Belgium;1. Department of Business and Management Science, NHH Norwegian School of Economics, N-5045 Bergen, Norway;2. Département de génie mécanique, Université Laval, Québec, G1V 0A6, Canada;1. Supply Chain and Logistics Optimization Research Centre, Faculty of Engineering, University of Windsor, Windsor, ON, Canada;2. Odette School of Business, University of Windsor, Windsor, ON, Canada;1. Department of Industrial & Systems Engineering, University at Buffalo, Buffalo, NY 14260, United States;2. eBay, Inc., San Jose, CA 95129, United States;3. Praxair Inc., Danbury, CT 06810, United States |
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| Abstract: | In this paper we present the use of game theoretic models to analyse the cost allocation problem in the context of repairable spare parts pooling. Two situations are studied. In the first situation, all pooling members fully cooperate without having self-interest. We use the core concept from cooperative game theory as the basis for designing a fair cost allocation. In the second situation, competition exists as each member has an interest in maximizing his own benefit. Using the concept of Nash equilibrium, we show that the cost allocation policy influences the companies in making their inventory decisions. |
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