A Novel Game-Theory-Based Analysis Approach for Running a Supply Chain Project

Abstract

As one of the most important management strategies, supply chain management (SCM) is increasingly being emphasized. And, an increasing focus is placed on the integration of overall supply chain resources. In running the strategy, one of key problems is how to judge the suitability that a project is managed by SCM paradigm. For this reason, a novel feasibility analysis approach based on game theory is presented for running a supply chain project. First of all, some basic conditions for judging the feasibility of a SCM project are discussed both on individual rationality and group rationality. Then, a viable bargain price range of candidate partners is proposed by using Bayes-Nash equilibrium, and a numerical example is given to illustrate its application. Finally, we discuss the relationship between the bargain price range and the competitive index in a SCM project.