Consider a two-retailer inventory system, a Non-cooperative game model is established to describe inventory pooling policy under disruption risk. It is proved that there exists a unique Nash equilibrium solution to the model. Model analyses show that lateral transshipments always possibly improve retailer's optimal expected profits under demand disruptions. Moreover, comparative static results reflect transshipment price and transshipment cost are two important parameters for optimal order volumes and optimal expected profits. At last, a heuristic algorithm is designed to solving the model's Nash equilibrium.
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