Cost Allocation of Integrated Supply Based on Shapley Value Method

Integrated Supply (I/S) has developed dramatically since its emergence in 1990s. But the buyers do not contact with the suppliers directly under general integrated supply model, which will lead to losing the direct control over them. I/S model by third-party logistics(TPL) may overcomes the disadvantage of traditional I/S model. A key problem of TPL integrated supply is to allocate the supply cost among the suppliers rationally. In this paper, Shapley value method is commended to solve the problem. To get over the two inherent limitations of Shapley value method, EOQ model of integrated supply is firstly adopted, which makes Shapley value method more practicable. Then, a weighting factor is used to adjust the Shapley value result which will lead to more reasonable result. Finally, an example proves that shapley value method is feasible and rational to allocate the I/S losgistics cost among the suppliers.