Abstract
A game theoretic model consisting of a manufacturer and multiple suppliers under demand uncertainty is addressed. The manufacturer and the suppliers are analyzed by a Stackelberg game where the manufacturer is a leader and the suppliers are followers. The paper addresses one manufacturer and its suppliers who are involved in purchasing and production with uncertain demands. Quantities and quality of components are decided by the selected suppliers. The quality of components purchased from suppliers is unknown to the manufacturer while it is known to the suppliers. Two scenarios (average case and worst case) are investigated for the manufacturer to estimate the quality of components. Computational experiments are conducted to illustrate the features of the proposed models with different parameters. The results show the validity of the proposed model.
