Skip to main content

Advertisement

SpringerLink
Log in

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

  • Published:
Sadhana Aims and scope Submit manuscript

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.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Similar content being viewed by others

References

  • Aumann R J, Dreze J H 1974 Cooperative games with coalition structures. Int. J. Game Theory 3: 217–237

    Article  MATH  MathSciNet  Google Scholar 

  • Aumann R J, Myerson R B 1988 Endogenous formation of links between players and of coalitions: An application of the Shapely value, in the Shapely Value: Essays in Honor of Lloyd S Shapely (Alvin-E Roth (ed.)) Cambridge, U.K. 175–191

  • Axelrod R 1984 The Evolution of Cooperation, Basic Books, New York

    Google Scholar 

  • Bela V, Goyal S 2000 A non-cooperative model of network formation. Econometrica 68: 1181–1229

    Article  MathSciNet  Google Scholar 

  • Cachon G, Netessine S 2004 Game theory in supply chain analysis. In Handbook of Quantitative Supply Chain Analysis: Modelling in the eBusiness Era. (eds.) David Simchi-Levi, S David Wu, Zuo-Jun (Max) Shen Kluwer

  • Cachon G, Lariviere M 2005 Supply chain coordination with revenue sharing contracts. Management Science 51(1): 30–44

    Article  Google Scholar 

  • Cachon G P, Netessine S 2004 Game theory in supply chain analysis, in D Simchi-Levi, S D Wu, Z-J Shen (eds.) Handbook of Quantitative Supply Chain Analysis: Modelling in E-business Era, Boston, MA, Kluwer Academic Publisher, 13–66

    Google Scholar 

  • Caulier J-F, Mauleon A, Vannetelbosch V 2007 Contractually stable networks, Working paper, University of Louvain, Belgium, 1–10

    Google Scholar 

  • Chopra S, Meindl P 2004 Supply Chain Management: Strategy, Planning and Operation, Second Edition, (NJ: Prentice Hall, Englewood Cliffs)

    Google Scholar 

  • Eisenhardt K M 1989 Agency theory: An assessment and review. Academy of Management Review 14(1): 57–74

    Article  Google Scholar 

  • Feinberg Y 1998 An incomplete cooperation structure for a voting game can be strategically stable. Games and Economic Behaviour 24: 2–9

    Article  MATH  MathSciNet  Google Scholar 

  • Fisher M 1997 What is the Right Supply Chain for your Product? Harvard Business Review, March–April 105–116

  • Fundenberg D, Tirole J 2005 Game theory, first Indian reprint, (New Delhi: Ane Books)

    Google Scholar 

  • Gillies D B 1959 Solutions to general non-zero sum games, In: A W Tucker, R D Luce (eds.) Contributions to the Theory of Games, Vol. IV, Princeton University Press, Princeton, NJ, 47–83

    Google Scholar 

  • Goyal S, Joshi S 2003 Networks of collaboration in oligopoly. Games and Economic Behaviour 43(1): 57–85

    Article  MATH  MathSciNet  Google Scholar 

  • Goyal S, Joshi S 2006 Bilateralism and free trade. Int. Economic Rev. 47(3): 749–778

    Article  MathSciNet  Google Scholar 

  • Granot D, Sosic G 2003 A three stage model for a decentralized distribution system of retailers. Operations Res. 51: 771–784

    Article  MATH  MathSciNet  Google Scholar 

  • Greenberg J 1994 Coalition structures, in Handbook of Game Theory, R J Aumann, S Hart (eds.) Elsevier Science, B.V. North Holland 2: 1305–1337

    Google Scholar 

  • Greene D 2002 JVS, alliances, consortia on path to survival for many, Semiconductor Magazine, June 2002

  • Haeringer G 2001 Onthe stability of cooperation structures,Working Paper, Department of Economics, Warwick University, Coventry, U.K. 1–19

    Google Scholar 

  • Handfield R B, Bechtel C 2002 The role of trust and relationship structure in improving supply chain responsiveness. Industrial Marketing Management 31(4): 367–382

    Article  Google Scholar 

  • Hartman B C, Dror M 1996 Cost allocation in continuous review inventory models. Naval Research Logistics 43: 549–561

    Article  MATH  Google Scholar 

  • Leng M, Parlar M2005 Allocation of cost savings in a three-level supply chain with demand information sharing: A cooperative-game approach, Working Paper, McMaster University, Hamilton, ON

    Google Scholar 

  • Littlechild S C, Owen G1973Asimple expression for the Shapely value in a special case. Management Science 20: 370–372

    Article  MATH  Google Scholar 

  • Mas-Colell A, Whinston M D, Green J R 1995 Microeconomic theory, (Oxford, U.K: Oxford University Press)

    Google Scholar 

  • Meca A, Timmer J, Garcia-Jurado I, Borm P E M 2004 Inventory games. European J. Operational Res. 156: 127–139

    Article  MATH  MathSciNet  Google Scholar 

  • Moulin H 1988 Axioms of Cooperative decision making, (Cambridge, U.K: Cambridge University Press)

    MATH  Google Scholar 

  • Myersom R B 1977 Graphs and cooperation in games. Mathematical Operation Res. 2: 225–229

    Article  Google Scholar 

  • Myerson R 1991 Game theory: Analysis of conflict, (Cambridge, MA: Harvard University press)

    MATH  Google Scholar 

  • Nagarajan M, Sosic G 2006 Game-theoretic analysis of cooperation among supply chain agents: Review and extensions. European J. Operational Res. 187(3) 719–745

    Article  MathSciNet  Google Scholar 

  • Park S, Suresh N C 2005 An investigation of the roles of electronic marketplaces in the supply chains, Proceedings of IEEE 38th Hawaii International Conference on System Sciences, 1–10

  • Plambeck E L, Taylor T A 2004 Implications of breach remedy and renegotiation for design of supply contracts, Working paper, (New York, NY: Columbia University)

    Google Scholar 

  • Premkumar G P 2003 Perspectives of e-marketplace by multiple stake holders. Communications of ACM 46(12): 279–288

    Article  Google Scholar 

  • Qin C-Z 1996 Endogenous formation of cooperation structures. J. Economic Theory 69: 218–226

    Article  MATH  Google Scholar 

  • Raghunathan S 2003 Impact of demand correlation in the value of and incentives for information sharing in a supply chain. European J. Operational Res. 146: 634–649

    Article  MATH  Google Scholar 

  • Reinhardt G, Dada M 2005 Allocating the gains from resource pooling with the Shapley value. J. Operational Res. Soc. 56: 997–1000

    Article  MATH  Google Scholar 

  • Roth A E 1988 Introduction to the shapely value, in The Shapely Value: Essays in honor of Lloyed S. Shapely, Cambridge University Press, 1–27

    Google Scholar 

  • Sauvee L 1998 Towards an institutional analysis of vertical coordination in agribusiness, in the Industrialization of Agriculture, J Royer, R Rojers (eds.) Aldershot, England, Ashgate Publishing Co.

    Google Scholar 

  • Schmeidler D 1969 The nucleolus of a characteristic function game. SIAM J. Applied Mathematics 17: 1163–1170

    Article  MATH  MathSciNet  Google Scholar 

  • Shapley L S 1953 A value for N-Person games, In: Contribution to the Theory of Games, vol. 2 (Princeton, NJ: Princeton University Press) 307–317

    Google Scholar 

  • Subramanian C, Shaw M J 2004 The effects of process characteristics on the value of B2B e-procurement. Information Technology and Management 5(1–2): 161–180

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Department of Mechanical Engineering, Indian Institute of Technology Delhi, Hauz Khas, New Delhi, 110 016, India

    Bikram K. Bahinipati, Arun Kanda & S. G. Deshmukh

Authors
  1. Bikram K. Bahinipati
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Arun Kanda
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. S. G. Deshmukh
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Bikram K. Bahinipati.

Rights and permissions

Reprints and permissions

About this article

Cite this article

Bahinipati, B.K., Kanda, A. & Deshmukh, S.G. Revenue sharing in semiconductor industry supply chain: Cooperative game theoretic approach. Sadhana 34, 501–527 (2009). https://doi.org/10.1007/s12046-009-0018-9

Download citation

  • Received:

  • Revised:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s12046-009-0018-9

Keywords

Search

Navigation