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The dynamic demand game: a Markov state fictitious play approach to a two-echelon supply chain problem under demand uncertainty

Author

Listed:
  • Diana G. Ramírez;
  • Julio Mario Daza-Escorcia
  • Javier Visbal Martinez
  • Carlos D. Paternina-Arboleda
  • Alfredo Garcia

Abstract

We approach a two-echelon supply chain optimisation problem, specifically, a retailer's replenishment problem, which faces stochastic demand. The retailer has to coordinate, beforehand, with his/her supplier on the amount purchased in order to satisfy their demanded quantity and, at the same time, minimise costs due to storage and penalty costs. To solve this problem, a Markov state game was designed and fictitious play, a learning methodology used in game theory, was applied and programmed in Borland C++ Builder 6.0 Enterprise Edition, where software known as 'UN Tech Supply Chain Optimiser' was generated and produced at a 95% confidence level, better results than those already found in literature for this same problem.

Suggested Citation

  • Diana G. Ramírez; & Julio Mario Daza-Escorcia & Javier Visbal Martinez & Carlos D. Paternina-Arboleda & Alfredo Garcia, 2012. "The dynamic demand game: a Markov state fictitious play approach to a two-echelon supply chain problem under demand uncertainty," International Journal of Industrial and Systems Engineering, Inderscience Enterprises Ltd, vol. 10(3), pages 319-335.
    • Handle: RePEc:ids:ijisen:v:10:y:2012:i:3:p:319-335
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    Cited by:

    1. Díaz, Ronald David Suárez & Paternina-Arboleda, Carlos D. & Martínez-Flores, José Luis & Jimenez-Barros, Miguel A., 2020. "Economic order quantity for perishables with decreasing willingness to purchase during their life cycle," Operations Research Perspectives, Elsevier, vol. 7(C).

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