Date of Award
Doctor of Philosophy (PhD)
This thesis deals with game theory and its applications in management science and focuses upon some management science areas such as inventory control and new product development. Some interesting theoretical findings and new policies are obtained by using the game theoretical approach to analyze certain management science problems. The discussion starts with a review of static game theory models and their applications in management science. Of particular interest here is the state of the art of game theory as an analytical technique in management science. Chapters Two and Three discuss the discount problem. Particular attention is paid to the gaming nature and the buyer's demand aspect of the problem. It is shown that, if they work independently and rationally, the seller and the buyer can gain from price discount only if it can attract more demand from the buyer. Nevertheless, they can gain from quantity discount even if demand is constant. Quantity discount is always better than a price discount for the seller and, in certain situations, can be very efficient in obtaining the maximum profit. Optimal decisions are obtained for both the seller and the buyer under various conditions. Chapter Four studies the order quantities of substitutable products with stochastic demands. This analysis extends the newsboy problem analysis into situations with three or more players. It is shown that there is one Nash equilibrium for the problem. If any player(s) acts irrationally, the other players' decision problem reduces to the one without the irrational player(s). If cooperation is possible, their decisions depend on whether side payments are allowed. If side payments are allowed, they will determine their order quantities together. If side payments are not allowed, secure strategies exist for each player. It is also shown that all players' cooperation is often worthwhile and feasible. Chapter Five analyzes the growth of new repeat purchasing products. It is shown that markets of repeat purchasing products will never saturate like that of consumer durable products unless customers are extremely loyal to at least one product. For new repeat purchasing products, the optimal advertising strategy is increasing at the introductory stage and then decreasing or possibly terminating after some time and, the optimal service strategy is monotonically increasing at the introductory stage and then possibly maintained constant at a certain level. Especially, more advertising should be done at early stages against competitors' advertising campaign. The game is solved analytically for optimal strategies in the case where all the control functions representing the effects of advertising and service are linear in the control variables. Finally, the main findings and possible extensions to this research are briefly summarized in Chapter Six. (Abstract shortened by UMI.)
Wang, Qinan, "Game theory models and their applications in some inventory control and new product management problems" (1991). Open Access Dissertations and Theses. Paper 3775.