A Game-theoretical Design Technique for Multi-stage Supply Chains under Uncertainty

We present a design approach for multi-stage Supply Chains (SCs) that allows selecting candidates and assigning them orders under uncertainty. A bargaining game model in its extensive form (i.e., with a time sequencing of moves) and in a fuzzy setting is proposed. The product quantities that each actor requires from the previous SC stage are determined modelling the real behavior of SC stakeholders, which on the one hand act to maximize their own profit, on the other hand cooperate to maximize the overall efficiency of the SC and minimize production costs and lead times. Assignments are determined taking into account stock levels, uncertain production or warehouse capacities, and customers' demand. Thus, the method supports the decision making process providing an agile, cooperative, and resource-efficient design of multi-stage SCs under uncertain parameters. A literature SC is used as a test case to evaluate the effectiveness of the technique.