A GAME THEORETIC APPROACH: IMPACT OF LEARNING ON THE OPTIMAL ORDERING POLICIES FOR IMPERFECT QUALITY ITEMS

Abstract

The supply chain management is outlined as amalgamation of business processes aligned to operational management and marketing problems like information sharing, supply chain coordination and inventory control. In recent decades, researchers have effectively worked on seeking optimal policies under supply chain management for obtaining practical and powerful outcomes. The outcome has ensued a generous body of work intended to contribute distantly using game theory to exemplify the nature of problems surfaced to basic and complex supply chains. In this paper,a new concept is attempted like game theoretic approach with learning effect under supply chain model and this model is developed to support the dealing between the performers (players) of the supply chain, supplier and purchaser, presented by non-cooperative game approach. Defective items are considered in this model and after the inspection process these items are sold at discounted price. It is also assumed that demand is sensitive to promotion expenses cost and buyer’s price without trade credit. Results are determined by the non- cooperative Stackelberg game theoretical approach. Finding suggest that buyer’s income is more due to the learning effect than seller in this model. Both the players get benefitted in case of leadership position. In the last, numerical visuals with sensitivity scrutiny are presented to support the theory of this paper.