Revenue sharing in semiconductor industry supply chain: Cooperative game theoretic approach

Abstract

This paper defines cooperation as the process of coordinating the objectives and activities of supply chain (SC) members. It also focuses on cooperation as a solution for hybrid coordination mechanism to form the basis for semiconductor industry supply chain management. In the complex and competitive environment of semiconductor industry supply chain, independent system members are facing the difficult task of providing/sharing incentives resulting from e-market activities in a fair and equitable manner. So, various other activities are necessary for the e-market to make revenue sharing operations more stable and reliable. In this context, the importance of coalition in enhancing the e-market capability, for revenue generation and sharing, is used to develop a possible mechanism for financial compensation to the supply chain members. Interpreting the supply chain as cooperation, the concepts of the Shapely value are used in this paper for analysing the revenue sharing problem. The motivation behind such a scheme is to align the supply chain members’ cost structure with the bidding value during auction and bargaining for e-procurement. The appropriateness of the Shapely value is verified to ensure that a stable solution exists. The practical implication of this paper is how to make right decisions about revenue sharing. The principal contribution of this approach is for establishing a pooling coalition in order to provide a stable and cooperative solution.