Evaluating the impact of items and cooperation in inventory models with exemptable ordering costs

Abstract: In this paper we introduce and analyse, from a game theoretical perspective, several multi-agent or multi-item continuous review inventory models in which the buyers are exempted from ordering costs if the price of their orders is greater than or equal to a certain amount. For all models we obtain the optimal ordering policy. We first analyse a simple model with one firm and one item. Then, we study a model with one firm and several items, for which we design a procedure based on cooperative game theory to evaluate the impact of each item on the total cost. Then, we deal with a model with several firms and one item for each firm, for which we characterise a rule to allocate the total cost among the firms in a coalitionally stable way. Finally, we discuss a model with several firms and several items, for which we characterise a rule to allocate the total cost among the firms in a coalitionally stable way and to evaluate the impact of each item on the cost that would be payable to each firm when using the allocation rule. All the concepts and results of this article are illustrated using data from a case study.