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Revenue sharing for resource reallocation among project activity contractors

  • S.I.: SING 14
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Abstract

Outsourcing project activities to contractors has become more and more popular in recent years, and activity contractors can increase the revenue of a project through cooperation. In this paper we consider cooperation between activity contractors through resource reallocation, and address two main issues. First, we seek to find the optimal scheme for resource reallocation among contractors. To this end, a linear programming model is established, and some properties of the optimal resource reallocation scheme are discussed. Second, we propose several revenue sharing schemes for contractors based on a cooperative game theory framework. Three schemes are introduced and compared: a scheme in the core, the Shapley value, and a proportional revenue sharing scheme. We show that the cooperative game of activity contractors in a general project network does not necessarily have a nonempty core. However, we identify a special class of project network for which the core of the cooperative game of activity contractors always exists and an allocation in the core is proposed based on shadow prices. The managerial insights we obtain in this paper are as follows. (i) Contractors should cooperate. (ii) Resources should not be transferred between contractors with high transferring costs. (iii) Resources are always transferred from contractors on non-critical paths to contractors on critical paths, and on critical paths, resources are always transferred from low efficiency contractors to high efficiency contractors.

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Acknowledgements

The authors are grateful for the constructive comments of the department editor and the referees, which have significantly improved the paper. This work was partially supported by the National Science Foundation of China (NSFC) (Nos. 71732003, 71501093, and 71871114), the Leading Talent Program of Guangdong Province (No. 2016LJ06D703), the Science and Technology Development Fund, Macau SAR (File No. FDCT/027/2016/A1), the Postdoctoral Science Foundation of China (No. 2019M653386), and the International Postdoctoral Exchange Fellowship Program.

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Authors and Affiliations

  1. School of Management and Engineering, Nanjing University, Nanjing, Jiangsu, China

    Xiaowei Lin, Jing Zhou & Lianmin Zhang

  2. Jinling College, Nanjing University, Nanjing, Jiangsu, China

    Xiaowei Lin

  3. The Shenzhen Research Institute of Big Data, Shenzhen, Guangdong, China

    Lianmin Zhang

  4. School of Science and Engineering, The Chinese University of Hong Kong, Shenzhen, Guangdong, China

    Yinlian Zeng

  5. School of Management and Economics, University of Electronic Science and Technology, Chengdu, Sichuan, China

    Yinlian Zeng

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  1. Xiaowei Lin
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Correspondence to Jing Zhou.

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Lin, X., Zhou, J., Zhang, L. et al. Revenue sharing for resource reallocation among project activity contractors. Ann Oper Res 301, 121–141 (2021). https://doi.org/10.1007/s10479-020-03753-y

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