Stockkeeping and controlling under game theoretic aspects

The stock level in industrial companies is frequently subject of critical discussions. Material managers tendtowards high stock levels to ensure delivery and operational readiness. In contrast, controllers demand lowerstock levels to minimize the costs of capital commitment. This decision conflict – based on lateral perception –can be modelled using an approach of game theory and it can be analysed in view of decision theory. This is thecentral object of this article. The consequences of decisions of the material manager and the controller in acompany will be analysed if their actions result in different payoffs. Both the warehouseman and the controllereach have two different alternatives to choose their own behaviour from with a specific probability. The materialmanager can select a low stock level at the risk of shortfalls or he can select a high stock level to ensurcedelivery disposition. The controller can check the economic efficiency of the stock level on a low or a high auditlevel. With respect to the different strategy conditions and the respective payoffs we show the existence of noncooperativeNash equilibria in dependence of specific probabilities by which the players choose their strategies.Following these actions the top management analyses how far the players have pursued the economic efficiencyof the company and how far the company was damaged because of the choice of their actions. This damage canbe exposed by the top management with a specific probability. Additionally, the analysis will provide themanagement with informations, how the payoffs should be specified in order to reduce the probability of badstockkeeping and bad auditing....