Game theoretic applications in supply chain management: A review

Recent emphasis on competition and cooperation in supply chains has resulted in the resurgence of game theory as a relevant tool for analyzing such interactions in a supply chain. This paper presents a review of more than 130 papers concerned with game theoretical applications in supply chain management (SCM). We first give a brief summary of the basic solution concepts in noncooperative and cooperative games such as Nash and Stackelberg equilibria, Nash arbitration scheme and cooperation with sidepayments, the core, the Shapley value and nucleolus. Our review of supply chain-related game theoretical applications is presented in five areas: 1. inventory games with fixed unit purchase cost, 2. inventory games with quantity discounts, 3. production and pricing competition, 4. games with joint decisions on inventory, production/pricing and other attributes. The paper concludes with a summary of our review, suggestions for potential applications of game theory in SCM and an alternative classification of all reviewed papers.