Cooperation Among Supply Chain Agents – A Novel Use of Inventory Models in DEA

Reducing inventory costs has become one of the key challenges facing supply chains. A centralized strategy is an effective way to reduce costs within supply chains. This paper presents an efficiency-based cooperation approach among agents across the supply chain. To this end, an inventory model is first developed to minimize total cost of traffic congestion, sustainability effort, price and shortage. Then, efficiency measures are proposed to determine the level of cooperation among agents. This approach takes into account explicitly decision-maker's preferences and uncertainty.