Lot-splitting model with cooperative game in supply chain

Based on the integrated total cost of both buyer and supplier, a lot-splitting model with cooperative game in a simple single buyer, single supplier, single product scenario is developed. The proposed model determines optimal order quantity, the number of deliveries and shipping quantity. Compared with the traditional single delivery, this model can obviously decrease supply cost, improve the situation of both suppliers and the buyers, so as to achieve the win-win purpose. The extra income could be allocated between the two parties according to their contribution. In addition, the convergence in delivery size can offer insights on the issue of the standardization of the transportation vehicle size.