Shapley value based transfer pricing in supply chains with stochastic demand

We study the question of how to ideally divide total profits among supply chain members, especially in a stochastic demand market. The Shapley value is used as the methodology solution to divide profits in a supply chain. To illustrate the Shapley value solution and procedures, a two-echelon supply chain consisting of one supplier and two heterogeneous retailers is examined. The goal is to figure out ideal transfer prices for products delivered among supply chain members. These transfer prices will achieve the suggested profit allocations among three companies.