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Distribution center consolidation games
Klijn, Flip; Slikker, Marco
Universitat Autònoma de Barcelona. Unitat de Fonaments de l'Anàlisi Econòmica; Institut d'Anàlisi Econòmica
We study the location-inventory model as introduced by Teo et al. (2001) to analyze the impact of consolidation of distribution centers on facility and inventory costs. We extend their result on profitability of consolidation. We associate a cooperative game with each location-inventory situation and prove that this game has a non-empty core for identical and independent demand processes. This illustrates that consolidation does not only lower joint costs (which was shown by Teo et al. (2001)), but it allows for a stable division of the minimal costs as well.
2006-05-09
Jocs, Teoria de
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Working Paper
Working papers; 602.04
         

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