Cost allocation model and its solution about inter-organizational cooperation based on game theory

In Supply Chain Environment, the boundary of cost management is not limited in one enterprise, but extend to inter-organizational cooperation, which bring on the inter-organizational cost management. Traditional single-factor cost allocation method and activity-based costing could not satisfied the need of inter-organizational cost allocation, while cooperative game theory is always applied to solve the allocation problem of alliance profits or total cost. This paper firstly discusses the applicability of cooperative game theory in inter-organizational cost allocation, and then a cost allocation model is founded based on cooperative game theory. Kinds of solutions for the models are analyzed and then the Shapley value method is commended among the solutions. Finally, the disadvantages of Shapley value method are discussed.