Abstract
AbstractA supply network design problem is addressed under a price elastic demand from the market. It is formulated as a biform game, combining a strategic subgame with a cooperative subgame. The cooperative subgame has a quadratic objective function. The results of this game are the winning coalition of manufacturing firms and the payoff profile associated with it. The proposed payoff allocation policy is shown to be fair, efficient and individually rational. Coalitional stability is conditioned on the game convexity, which is not always verified. Global profit optimality is obtained if the manufacturing network is directly facing the market. In the presence of an autonomous retailer between the manufacturing network and the market, the supply chain output is not globally optimal any more.
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