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Competition in Supply Chain with Service Contributions

We study the supply chain with two manufacturers producing

competing products and selling them through a common retailer. The

two manufacturers must decide on the wholesale price and the level

of service they plan to provide to the consumer. Each firm are

assumed to optimize only its own profit (uncoordinated). The

consumer demand depends on two factors: (1) retail price, and (2)

service level provided by the manufacturer. We extend the study on

this basic model in three directions. First, we explore the role

of bargaining power in supply chain strategic interactions. We

derive and compare equilibrium solutions for the supply chain

under three different scenarios (e.g., Manufacturer Stackelberg,

Retailer Stackelberg, and Vertical Nash). Second, we extend the

framework to study multi-period model. In this model, demand also

depends on the past period retail prices and service levels, as

well as current prices and service levels. Game-theoretic

approaches and dynamic system and control theory are used as tools

to model the problem. Finally, we examine a single period problem

with stochastic demand. When demand is uncertain, the retailer

faces a newsvendor-type problem. In our model, the newsvendor must

manage two competing products against a price-dependent demand. We

derive an expression for the newsvendor's optimal retail prices.

Next, we provide an algorithm to search for the equilibrium

wholesale price and service level, given that the manufacturers

know the retailer's reaction function. Some numerical examples are provided.

Identiferoai:union.ndltd.org:GATECH/oai:smartech.gatech.edu:1853/8053
Date06 April 2004
CreatorsCharoensiriwath, Chayakrit
PublisherGeorgia Institute of Technology
Source SetsGeorgia Tech Electronic Thesis and Dissertation Archive
Languageen_US
Detected LanguageEnglish
TypeDissertation
Format1968227 bytes, application/pdf

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