Revenue-Sharing Versus Wholesale Price Contracts Under Chain-to-Chain Competition
We consider price competition with a linear demand function and compare three scenarios. To compare the impact of revenue-sharing or wholesale price contracts on manufacturers, retailers and supply chains. In the three common cases, the maximum profit of
- PDF / 338,450 Bytes
- 9 Pages / 439.36 x 666.15 pts Page_size
- 81 Downloads / 148 Views
Abstract We consider price competition with a linear demand function and compare three scenarios. To compare the impact of revenue-sharing or wholesale price contracts on manufacturers, retailers and supply chains. In the three common cases, the maximum profit of retailers, manufacturers and supply chains was analyzed and compared. We consider the interaction between the various links of the supply chain, and through different strategies, achieve the optimal decision of wholesale price and order quantity. By comparing the profit trends between manufacturers, retailers and supply chains, and the difference in profits, we can get different strategies for the supply chain in the two competing supply chains. And the impact of the profits of retailers and manufacturers is significant. Keywords Supply chain competition · Game theory · Revenue-sharing · Wholesale price contracts
1 Introduction Inspired by the rapid development of information technology in recent years, firms that face more intense global competition are cooperating with one another as never before, to achieve successes in the market place. This paper offers a effectively
H. Shen () · J. Liu School of Business, Xi’an International Studies University, Xi’an, Shaanxi, China e-mail: [email protected] G. Zhang Mechanical, Automotive and Materials Engineering, University of Windsor, Windsor, Ontario, Canada e-mail: [email protected] Y. Fu · K. K. Lai College of Economics, Shenzhen University, Shenzhen, China © The Editor(s) (if applicable) and The Author(s), under exclusive licence to Springer Nature Singapore Pte Ltd. 2020 X. Li, X. Xu (eds.), Proceedings of the Seventh International Forum on Decision Sciences, Uncertainty and Operations Research, https://doi.org/10.1007/978-981-15-5720-0_14
125
126
H. Shen et al.
examination of how to design and operate supply chains to effectively deal with supply chain competition. To compare the impact of revenue-sharing or wholesale price contracts on both manufacturers, retailers and supply chains.
2 Model Consider two competing supply chains that distribute the homogeneous product in the market, where each supply chain consists of an exclusive manufacturer and a retailer. Each manufacturer can choose either a revenue-sharing contract or a wholesale price contract with the retailer. The retailers are engaged in contract competition by determining order quantities from their manufactures. Two supply chains, manufactures and retailers are indexed by i, and j, where i, j ∈ {1, 2}, i = j. Several useful assumptions are proposed to derive the analytical solutions of this model and maintained throughout the forthcoming analysis: 1. All players are risk neutral. 2. The manufacturers can only contract with the retailers of their own supply chains [1]. 3. The contract information is public to all manufactures and retailers [1]. 4. The production costs associated with both manufactures are identical and have been normalized to zero [2]. 5. The homogeneous product has a short life cycle and thus two supply chains only
Data Loading...
