Allocating savings in purchasing consortia; analysing solutions from a game theoretic perspective

G.J. Heijboer

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    Abstract

    While economies of scale are an obvious advantage for a purchasing consortium as a whole, the benefits for one member is not always clear. He may fear that other members benefit parasitically from his leverage causing lack of commitment and hesitance to join a consortium. This paper presents an instrument that provides clarity in the allocation of cost savings by modelling a purchasing consortium as a cooperative game. With this model we analyse how common approaches to this allocation problem fit with game theoretic concepts. As it turns out, all members paying the same price per item is not a good policy in general. This policy may allocate the largest share of consortium savings to members with the least leverage. Instead game theoretic concepts like the compromise value should be preferred, as they always give reasonable solutions to this problem.
    Original languageUndefined
    Title of host publicationProceedings of the 11th International Annual IPSERA Conference, 25-27 March 2002, Enschede, The Netherlands
    Pages275-287
    Number of pages13
    Publication statusPublished - 2002
    Event11th Annual IPSERA Conference 2002: Inspiring the purchasing community - University of Twente, Enschede, Netherlands
    Duration: 25 Mar 200227 Mar 2002
    Conference number: 11

    Conference

    Conference11th Annual IPSERA Conference 2002
    CountryNetherlands
    CityEnschede
    Period25/03/0227/03/02

    Keywords

    • METIS-207265
    • IR-43726

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