Fairness and project supply chain coordination

The modelling of supply chain coordination has received considerable attention in the literature, but little attention has been paid to the fair allocation of derived profit and risk from co-ordinating the supply chain. Usually the allocation has been arbitrarily left to depend on the bargaining power of the members. However, the absence of fair allocation mechanisms has been proved to be a problem in both literature and practice. The few models of fairness that have been proposed in the context of supply chain coordination have been in the context of general product supply chains with price and quantity as decision variables. Very limited knowledge is available for project supply chains where the resource consumption rate is a decision variable. Moreover, these models did
not take into consideration the effects of loss of efficiency due to fairness. Therefore we propose models of fairness for the equitable allocation of risks and benefits stemming from project supply chain coordination. There is a lack of a unified definition of fairness in the literature. Our model incorporates inequity aversion models (the most commonly used definition of fairness in supply chain literature) for Stackelberg games with take it or leave it contracts, and Nash’s bargaining models for repeated games with bargaining situation. We also include the concepts of Shapley value and alpha fairness in order to take care of the constraints of minimizing the loss of efficiency due to fairness