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Distribution Center Consolidation Games

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  • Flip Klijn
  • Marco Slikker

Abstract

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 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. Hence, consolidation does not only lower joint costs (Teo et al. (2001)), but it allows for a stable division of the minimal costs as well.

Suggested Citation

  • Flip Klijn & Marco Slikker, 2004. "Distribution Center Consolidation Games," Working Papers 118, Barcelona School of Economics.
    • Handle: RePEc:bge:wpaper:118
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    References listed on IDEAS

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    1. Meca, Ana & Timmer, Judith & Garcia-Jurado, Ignacio & Borm, Peter, 2004. "Inventory games," European Journal of Operational Research, Elsevier, vol. 156(1), pages 127-139, July.
      • Meca-Martinez, A. & Timmer, J.B. & Garcia-Jurado, I. & Borm, P.E.M., 1999. "Inventory Games," Other publications TiSEM 21f26b3f-7fae-4f19-908f-a, Tilburg University, School of Economics and Management.
      • Meca, A. & Timmer, J.B. & Garcia-Jurado, I. & Borm, P.E.M., 2004. "Inventory games," Other publications TiSEM 49368f2d-02fc-49c9-9d74-8, Tilburg University, School of Economics and Management.
      • Meca-Martinez, A. & Timmer, J.B. & Garcia-Jurado, I. & Borm, P.E.M., 1999. "Inventory Games," Discussion Paper 1999-53, Tilburg University, Center for Economic Research.
    2. Guillermo Gallego, 1998. "New Bounds and Heuristics for (Q, r) Policies," Management Science, INFORMS, vol. 44(2), pages 219-233, February.
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