Int. J. of Industrial and Systems Engineering   »   2012 Vol.10, No.3



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


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


Centro de Investigación en Modelación Empresarial del Caribe, Barranquilla, Colombia
Universidad Autónoma del Caribe, Barranquilla, Colombia
Universidad del Norte, Barranquilla, Colombia
Universidad del Norte, Barranquilla, Colombia
University of Virginia, Charlottesville, VA 22904, USA


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.


Keywords: two-echelon supply chains; Markov game; fictitious play; demand uncertainty; supply chain management; SCM; supply chain optimisation; retailer replenishment.


DOI: 10.1504/IJISE.2012.045678


Int. J. of Industrial and Systems Engineering, 2012 Vol.10, No.3, pp.319 - 335


Available online: 15 Feb 2012



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