Producing two substitutable products under a supply chain including two manufacturers and one retailer: A game-theoretic approach.

Jafari, Hamed; Safarzadeh, Soroush

In the current study, a supply chain structure is considered consisting of duopolistic manufacturers and monopolistic retailer. In the considered structure, the manufacturers product two substitutable products and deliver them to end customers. One of the manufacturers sells his/her products only through the common retailer whereas another one sells directly to customers as well as through the common retailer. Obviously, a competitive behavior is established in order to price the products under the considered supply chain. In this point of view, a game-theoretic approach is applied including Nash, Manufacturers-Stackelberg, and Retailer-Stackelberg games to analyze the pricing decisions. Then, the equilibrium strategies obtained from the investigated games are discussed and some insights are presented. The results indicate that Manufacturers-Stackelberg and Nash games respectively lead to the highest and the lowest profits for the manufacturers and the whole system. Furthermore, the highest profit for the common retailer is obtained from Retailer-Stackelberg game.

SUPPLY chains; MANUFACTURING industries; COMPETITION (Psychology); NASH equilibrium; RETAIL industry

Journal of Industrial & Management Optimization, 2023, Vol 19, Issue 5, p1

1547-5816

Academic Journal

10.3934/jimo.2022102