Abstract
In this paper, a game theoretic model to coordinate single manufacturer and multiple suppliers under demand uncertainty with asymmetric quality information is presented. This paper resolves production, inventory and price with uncertain demands simultaneously. The quality information between the manufacturer and suppliers is asymmetric. In order words, the quality information of components purchased is unknown to the manufacturer. Thus, the manufacturer encounters uncertain amount of defective components after ordering. However, suppliers know complete information of quality of components. In order to estimate the number of defective components, two scenarios are introduced in the paper. We consider two scenarios: an average case and a worst case for the manufacturer to estimate uncertainty. The coordination problem is modeled by Stackelberg game where the manufacturer is the leader and suppliers are followers. An optimization approach is proposed to find an equilibrium under demand uncertainty. Computational results show the effectiveness of the proposed approach.
