Game Theoretic Analysis of Maximum Cooperative Purchasing Situations

This article introduces maximum cooperative purchasing (MCP)-situations, a new class of cooperative purchasing situations. Next, an explicit alternative mathematical characterization of the nucleolus of cooperative games is provided. The allocation of possible cost savings in MCP-situations, in which the unit price depends on the largest order quantity within a group of players, is analyzed by defining corresponding cooperative MCP-games. We show that a decreasing unit price is a sufficient condition for a nonempty core: there is a set of marginal vectors that belong to the core. The nucleolus of an MCP-game can be derived in polynomial time from one of these marginal vectors. To show this result, we use the new mathematical characterization for the nucleolus for cooperative games. Using the decomposition of an MCP-game into unanimity games, we find an explicit expression for the Shapley value. Finally, the behavior of the solution concepts is compared numerically. (c) 2013 Wiley Periodicals, Inc. Naval Research Logistics 60: 607-624, 2013