A Profit Allocation Mechanism for Multiple-Channels Order Fulfillment System of an E-Retailers Alliance

Due to the increasingly fierce competition in recent years, the e-retailers try to establish cooperation alliance. In this paper, we study a profit allocation problem in the multiple-channels order fulfillment system of an e-retailers cooperation alliance. The aim of the cooperation is to maximize the total profit of the alliance by sharing the orders and inventories of goods of all e-retailers, which also helps to increase the profit of each e-retailer. After cooperation, a Rule-utilitarianism core (RUC) profit allocation mechanism is designed to fairly allocate the total profit of the alliance. RUC mechanism is compared with well know Shapley allocation and Egalitarian core allocation. The effectiveness of the RUC mechanism is verified by numeric experiments. The results show that the cooperation can bring more profits for all e-retailers and the RUC mechanism can insure the stability of the alliance on the basis of the contribution measure of each e-retailer to the alliance.