The following steps will be repeated for every allocation decision round that you participate in.
In each round, two retailers order the product as much as they need. The computer calculates Total orders, which is the sum of the orders from both retailers.
After you receive the order from both retailers, you will make an allocation decision. You can allocate your capacity according to your views on fairness. However, your allocation decision must satisfy some of the following rules.
1. The sum of allocations to the retailers should be equal or less than your capacity (K=100). Because you have a fixed capacity K=100, you can only allocate up to 100, even if the sum of retailer’s orders exceeds 100.
2. No retailer should receive a product larger than his order quantity.
3. You don’t need to allocate all of your capacity (K=100). However, the more capacity you allocate, the more profit you can make. Since the wholesale price w is 1 token, you can earn up to
profit (tokens) = wholesale price × MIN( sum of order quantity, K )
For example, consider the situation in which retailers A and B ordered 70, 55.
The following allocation decisions are not possible.
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