Consider a set of n stores with single-item and single-period demands. Assume an option of centralized ordering and inventory with holding and penalty costs only. In this case, a cooperative inventory "centralization" game "defines" allocations of the cost. We examine the conditions under which such an inventory centralization game has a nonempty core. We prove the existence of nonempty core for demands with symmetric distributions and the existence of nonempty core for joint multivariate normal demand distribution. We establish the equivalency of four different nonempty core conditions for the Newsboy Problem and demonstrate their efficacy for discrete independent and identically distributed (iid) demands. Journal of Economic Literature Classification Numbers: C44, C62, C71.
ASJC Scopus subject areas
- Economics and Econometrics