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Applying a one-shot and infinite repeated inspection game to materials management

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  • Günter Fandel
  • Jan Trockel

Abstract

An inspection game models a conflict situation between an inspector and an inspectee. The mathematical analysis aims to determine optimal behaviour of the inspectee. In this paper, the controller’s (inspector) job is to audit a planner’s (inspectee) decision with regard to its optimality and to submit a report to the company’s top managers. Based on Fandel and Trockel (Int J Prod Econ 133:256–261, 2011 ) this inspection game is discussed here as an infinite two-person game under the aspect of costs minimization. The results show that a higher costs deviation because of a competitive behaviour of the strategic players will decrease their payoffs, so that the optimal cooperative behaviour will finally lead to a better solution for the company with respect to cost minimization as normally expected. Copyright Springer-Verlag 2013

Suggested Citation

  • Günter Fandel & Jan Trockel, 2013. "Applying a one-shot and infinite repeated inspection game to materials management," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 21(2), pages 495-506, March.
    • Handle: RePEc:spr:cejnor:v:21:y:2013:i:2:p:495-506
    DOI: 10.1007/s10100-012-0244-9
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    References listed on IDEAS

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    1. R.J. Aumann & S. Hart (ed.), 2002. "Handbook of Game Theory with Economic Applications," Handbook of Game Theory with Economic Applications, Elsevier, edition 1, volume 3, number 3.
    2. James W. Friedman, 1971. "A Non-cooperative Equilibrium for Supergames," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 38(1), pages 1-12.
    3. Fandel, Günter & Trockel, Jan, 2011. "Optimal lot sizing in a non-cooperative material manager-controller game," International Journal of Production Economics, Elsevier, vol. 133(1), pages 256-261, September.
    4. Tim Friehe, 2008. "Correlated payoffs in the inspection game: some theory and an application to corruption," Public Choice, Springer, vol. 137(1), pages 127-143, October.
    5. Abreu, Dilip & Rubinstein, Ariel, 1988. "The Structure of Nash Equilibrium in Repeated Games with Finite Automata," Econometrica, Econometric Society, vol. 56(6), pages 1259-1281, November.
    6. Avenhaus, Rudolf & Von Stengel, Bernhard & Zamir, Shmuel, 2002. "Inspection games," Handbook of Game Theory with Economic Applications, in: R.J. Aumann & S. Hart (ed.), Handbook of Game Theory with Economic Applications, edition 1, volume 3, chapter 51, pages 1947-1987, Elsevier.
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