Game Theory Based Partnership Modeling to Procure Construction MaterialBetween Suppliers and HousingDeveloper

Abstract

The demand of residential housing always keeps increasing throughout several decades in developing countries such as Indonesia. The population growth and economy upsurge speed up the housing demand. This situation results in glittering prospect in housing development. The developer together with its suppliers play significant roles in the success of this business. Hence the corresponding relationship between the two is critical to analyze in order to attain a certain level of effectiveness. At the time being, this relationship is commonly lead by the developer in a one-way approach. Developerdoes supplier selection based on lowest price, minimum quality requirement and lead time. This conventional approach is considered to be inadequate since the developer decision on supplier selection is very possible to be manipulated by those suppliers in opposite ways.The effective decision making process should be made on the basis of cooperation between developer and supplier. This study aims to model the relationshipbetween suppliers and developer based on cooperative game theory.Thepreliminary outcome isa set of models on relationship between suppliersanddeveloper.This model is later on utilized to providewin-win solution in term ofsatisfactory profit distribution within cooperative relationship.