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Developing Fair Investment Plans to Enhance Supply Chain Visibility Using Cooperative Games

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  • Changhyun Kim

    (Graduate School of Logistics, Incheon National University, Incheon 22012, Korea)

  • KwangSup Shin

    (Graduate School of Logistics, Incheon National University, Incheon 22012, Korea)

Abstract

As supply chains become more complex and globalized, the individual participants of the supply chains should invest in systems based on information communication technologies (ICT) such as the remote frequency identification device (RFID) with tags that secure the visibility of the entire supply chain. In addition, the level of visibility, such as the container, pallet, carton, and box, should be determined for each participant to optimize its own profit function. By using a collaborative game scheme, the present study illustrates the relationships among participants who invest to a certain level of visibility, and then how much value each participant gets. To find feasible solutions, a genetic algorithm-based mechanism is devised for modeling various fitness functions considering the total profit and benefit to cost (B/C) ratio. The proposed framework considers the relationship among participants, as well as the impact from the enhanced visibility, and it may be possible to make fair and rational decisions for all participants based on the quantitative metrics such as the B/C ratio. In this paper, we propose a novel method based on the game-theoretic approach where the enhanced visibility prevents a certain participant from taking most of the benefit. It seems possible to establish a long-term sustainable supply chain visibility by distributing profit fairly to all participants in the supply chain.

Suggested Citation

  • Changhyun Kim & KwangSup Shin, 2019. "Developing Fair Investment Plans to Enhance Supply Chain Visibility Using Cooperative Games," Sustainability, MDPI, vol. 11(11), pages 1-13, June.
    • Handle: RePEc:gam:jsusta:v:11:y:2019:i:11:p:3209-:d:238456
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    References listed on IDEAS

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    1. Hyun Cheol Lee & Chunghun Ha, 2019. "Sustainable Integrated Process Planning and Scheduling Optimization Using a Genetic Algorithm with an Integrated Chromosome Representation," Sustainability, MDPI, vol. 11(2), pages 1-23, January.
    2. Young-woo Kim & Tai-Woo Chang & Jinwoo Park, 2017. "Gen2 RFID-Based System Framework for Resource Circulation in Closed-Loop Supply Chains," Sustainability, MDPI, vol. 9(11), pages 1-17, October.
    3. Sabinne Lee & Kwangho Jung, 2018. "The Role of Community-led Governance in Innovation Diffusion: The Case of RFID Waste Pricing System in the Republic of Korea," Sustainability, MDPI, vol. 10(9), pages 1-23, September.
    4. Nachiappan, S.P. & Jawahar, N., 2007. "A genetic algorithm for optimal operating parameters of VMI system in a two-echelon supply chain," European Journal of Operational Research, Elsevier, vol. 182(3), pages 1433-1452, November.
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    Cited by:

    1. Gao, Evelyn & Sowlati, Taraneh & Akhtari, Shaghaygh, 2019. "Profit allocation in collaborative bioenergy and biofuel supply chains," Energy, Elsevier, vol. 188(C).
    2. Chauhan, Chetna & Kaur, Puneet & Arrawatia, Rakesh & Ractham, Peter & Dhir, Amandeep, 2022. "Supply chain collaboration and sustainable development goals (SDGs). Teamwork makes achieving SDGs dream work," Journal of Business Research, Elsevier, vol. 147(C), pages 290-307.

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