Making the most of game theory in the supplier selection process for complex items

Miguel Mediavilla, Kepa Mendibil, Carolina Bernardos

Research output: Contribution to journalArticle

Abstract

There has been a growing interest in the application of game-theory to enhance the impact of supplier selection processes, but existing applications have been focused on commodity products. Therefore, scholars have recently called for further research into the use of game-theory to develop supplier selection processes for more complex products. The aim of this paper is to contribute by discussing the design and implementation of a novel supplier selection process based on game-theory through an empirical study of a construction project for an automotive company. The novelty of this research stems from the application of game-theory to design and implement a two-phase supplier selection process, combining a modified Japanese-auction with a structured bargaining process, and evaluating its impact in the context of complex items. Findings suggest that two-phase processes can enhance the effectiveness of the supplier selection by increasing competition and generating better predictions of the outcomes from the negotiation.

Original languageEnglish
JournalProduction Planning and Control
Early online date4 Jun 2020
DOIs
Publication statusE-pub ahead of print - 4 Jun 2020

Keywords

  • supplier selection
  • complex items
  • bargaining
  • reverse auction
  • game theory

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