IDEAS home Printed from https://ideas.repec.org/a/eee/proeco/v124y2010i1p121-136.html
   My bibliography  Save this article

Game-theoretic approach to simultaneous configuration of platform products and supply chains with one manufacturing firm and multiple cooperative suppliers

Author

Listed:
  • Zhang, Xinyan
  • Huang, George Q.

Abstract

This paper deals with simultaneous configuration of platform products and supply chains. The supply chain consists of one manufacturer and multiple cooperative suppliers. A common platform is shared for developing/configuring the product family with variant modules which are substitutable in the sense that high-performance module options can replace low-performance ones. As the customer in the supply chain, the manufacturer takes its leading role by making the first move to produce decisions on platform products configuration (PPC) and supplier selection. The manufacturer and concerned suppliers then move cooperatively to make their ordering and pricing decisions with a common objective to maximize their joint payoffs. We derive the optimal solution ranges for this two-moves dynamic game according to Nash's bargaining model. An iterative algorithm is developed to find the subgame perfect equilibrium. A numerical study is conducted through a series of simulation experiments to illustrate how useful insights about the mutual impacts between the PPC and SCC (supply chain configuration) decisions can be obtained from the proposed game models and solution procedure. The results are further compared with those obtained in a previous study with non-cooperative suppliers. The comparative study allows us to appreciate managerial measures under different supply chain coordination schemes. It is found that a supply chain with cooperative suppliers is more effective by using the lot-for-lot policy and more competitive by accommodating higher product variety.

Suggested Citation

  • Zhang, Xinyan & Huang, George Q., 2010. "Game-theoretic approach to simultaneous configuration of platform products and supply chains with one manufacturing firm and multiple cooperative suppliers," International Journal of Production Economics, Elsevier, vol. 124(1), pages 121-136, March.
    • Handle: RePEc:eee:proeco:v:124:y:2010:i:1:p:121-136
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0925-5273(09)00383-1
    Download Restriction: Full text for ScienceDirect subscribers only
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. V. Krishnan & Saurabh Gupta, 2001. "Appropriateness and Impact of Platform-Based Product Development," Management Science, INFORMS, vol. 47(1), pages 52-68, January.
    2. James P. Monahan, 1984. "A Quantity Discount Pricing Model to Increase Vendor Profits," Management Science, INFORMS, vol. 30(6), pages 720-726, June.
    3. Ma, Shihua & Wang, Wei & Liu, Liming, 2002. "Commonality and postponement in multistage assembly systems," European Journal of Operational Research, Elsevier, vol. 142(3), pages 523-538, November.
    4. David A. Collier, 1982. "Aggregate Safety Stock Levels and Component Part Commonality," Management Science, INFORMS, vol. 28(11), pages 1296-1303, November.
    5. V. Krishnan & Karl T. Ulrich, 2001. "Product Development Decisions: A Review of the Literature," Management Science, INFORMS, vol. 47(1), pages 1-21, January.
    6. Hau L. Lee & Meir J. Rosenblatt, 1986. "A Generalized Quantity Discount Pricing Model to Increase Supplier's Profits," Management Science, INFORMS, vol. 32(9), pages 1177-1185, September.
    7. Salvador, Fabrizio & Forza, Cipriano & Rungtusanatham, Manus, 2002. "How to mass customize: Product architectures, sourcing configurations," Business Horizons, Elsevier, vol. 45(4), pages 61-69.
    8. Arshinder & Kanda, Arun & Deshmukh, S.G., 2008. "Supply chain coordination: Perspectives, empirical studies and research directions," International Journal of Production Economics, Elsevier, vol. 115(2), pages 316-335, October.
    9. Nash, John, 1950. "The Bargaining Problem," Econometrica, Econometric Society, vol. 18(2), pages 155-162, April.
    10. Abel P. Jeuland & Steven M. Shugan, 1983. "Managing Channel Profits," Marketing Science, INFORMS, vol. 2(3), pages 239-272.
    11. Agard, Bruno & Penz, Bernard, 2009. "A simulated annealing method based on a clustering approach to determine bills of materials for a large product family," International Journal of Production Economics, Elsevier, vol. 117(2), pages 389-401, February.
    12. Fangruo Chen & Awi Federgruen & Yu-Sheng Zheng, 2001. "Coordination Mechanisms for a Distribution System with One Supplier and Multiple Retailers," Management Science, INFORMS, vol. 47(5), pages 693-708, May.
    13. Viswanathan, S. & Wang, Qinan, 2003. "Discount pricing decisions in distribution channels with price-sensitive demand," European Journal of Operational Research, Elsevier, vol. 149(3), pages 571-587, September.
    14. Rajeev Kohli & Heungsoo Park, 1989. "A Cooperative Game Theory Model of Quantity Discounts," Management Science, INFORMS, vol. 35(6), pages 693-707, June.
    15. Z. Kevin Weng, 1995. "Channel Coordination and Quantity Discounts," Management Science, INFORMS, vol. 41(9), pages 1509-1522, September.
    16. Charles J. Corbett & Xavier de Groote, 2000. "A Supplier's Optimal Quantity Discount Policy Under Asymmetric Information," Management Science, INFORMS, vol. 46(3), pages 444-450, March.
    17. Rajeev Kohli & Heungsoo Park, 1994. "Coordinating Buyer-Seller Transactions Across Multiple Products," Management Science, INFORMS, vol. 40(9), pages 1145-1150, September.
    18. Yigal Gerchak & Michael J. Magazine & A. Bruce Gamble, 1988. "Component Commonality with Service Level Requirements," Management Science, INFORMS, vol. 34(6), pages 753-760, June.
    19. Balakrishnan, Nagraj (Raju) & Chakravarty, Amiya K., 2008. "Product design with multiple suppliers for component variants," International Journal of Production Economics, Elsevier, vol. 112(2), pages 723-741, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Li, Wei & Sun, Hui & Tong, Meng & Mustafee, Navonil & Koh, Lenny, 2024. "Customizing customization in a 3D printing-enabled hybrid manufacturing supply chain," International Journal of Production Economics, Elsevier, vol. 268(C).
    2. L. X. Cui, 2016. "Joint optimization of production planning and supplier selection incorporating customer flexibility: an improved genetic approach," Journal of Intelligent Manufacturing, Springer, vol. 27(5), pages 1017-1035, October.
    3. Lingling Wang & Tsunemi Watanabe, 2016. "A Stackelberg Game Theoretic Analysis of Incentive Effects under Perceived Risk for China’s Straw-Based Power Plant Supply Chain," Energies, MDPI, vol. 9(6), pages 1-20, June.
    4. Palsule-Desai, Omkar D. & Tirupati, Devanath & Shah, Janat, 2015. "Product line design and positioning using add-on services," International Journal of Production Economics, Elsevier, vol. 163(C), pages 16-33.
    5. Wang, Jian & He, Shulin, 2022. "Optimal decisions of modularity, prices and return policy in a dual-channel supply chain under mass customization," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 160(C).
    6. Robert N. Boute & Maud M. Van den Broeke & Kristof A. Deneire, 2017. "Barco Implements Platform-Based Product Development in Its Healthcare Division," Decision Analysis, INFORMS, vol. 48(01), pages 35-44, February.
    7. Xiong, Yixuan & Du, Gang & Jiao, Roger J., 2018. "Modular product platforming with supply chain postponement decisions by leader-follower interactive optimization," International Journal of Production Economics, Elsevier, vol. 205(C), pages 272-286.
    8. Rezapour, Shabnam & Hassani, Ashkan & Farahani, Reza Zanjirani, 2015. "Concurrent design of product family and supply chain network considering quality and price," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 81(C), pages 18-35.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Sarmah, S.P. & Acharya, D. & Goyal, S.K., 2006. "Buyer vendor coordination models in supply chain management," European Journal of Operational Research, Elsevier, vol. 175(1), pages 1-15, November.
    2. Qinan Wang & Ruifang Wang, 2005. "Quantity discount pricing policies for heterogeneous retailers with price sensitive demand," Naval Research Logistics (NRL), John Wiley & Sons, vol. 52(7), pages 645-658, October.
    3. Qinan Wang, 2004. "Coordinating independent buyers with integer‐ratio time coordination and quantity discounts," Naval Research Logistics (NRL), John Wiley & Sons, vol. 51(3), pages 316-331, April.
    4. Viktoryia Buhayenko & Dick den Hertog, 2017. "Adjustable Robust Optimisation approach to optimise discounts for multi-period supply chain coordination under demand uncertainty," International Journal of Production Research, Taylor & Francis Journals, vol. 55(22), pages 6801-6823, November.
    5. Qiu, Xuan & Lee, Chung-Yee, 2019. "Quantity discount pricing for rail transport in a dry port system," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 122(C), pages 563-580.
    6. Nihat Altintas & Feryal Erhun & Sridhar Tayur, 2008. "Quantity Discounts Under Demand Uncertainty," Management Science, INFORMS, vol. 54(4), pages 777-792, April.
    7. Lee, Chang Hwan, 2007. "Coordination on stocking and progressive pricing policies for a supply chain," International Journal of Production Economics, Elsevier, vol. 106(1), pages 307-319, March.
    8. Brian Tomlin, 2003. "Capacity Investments in Supply Chains: Sharing the Gain Rather Than Sharing the Pain," Manufacturing & Service Operations Management, INFORMS, vol. 5(4), pages 317-333, November.
    9. Albert Y. Ha & Lode Li & Shu-Ming Ng, 2003. "Price and Delivery Logistics Competition in a Supply Chain," Management Science, INFORMS, vol. 49(9), pages 1139-1153, September.
    10. Zhou, Yong-Wu & Min, Jie & Goyal, Suresh K., 2008. "Supply-chain coordination under an inventory-level-dependent demand rate," International Journal of Production Economics, Elsevier, vol. 113(2), pages 518-527, June.
    11. Li, Jianli & Liu, Liwen, 2006. "Supply chain coordination with quantity discount policy," International Journal of Production Economics, Elsevier, vol. 101(1), pages 89-98, May.
    12. Duan, Lisha & Ventura, José A., 2019. "A Dynamic Supplier Selection and Inventory Management Model for a Serial Supply Chain with a Novel Supplier Price Break Scheme and Flexible Time Periods," European Journal of Operational Research, Elsevier, vol. 272(3), pages 979-998.
    13. L Lei & Q Wang & C Fan, 2006. "Optimal business policies for a supplier–transporter–buyer channel with a price-sensitive demand," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 57(3), pages 281-289, March.
    14. Fangruo Chen, 1999. "Decentralized Supply Chains Subject to Information Delays," Management Science, INFORMS, vol. 45(8), pages 1076-1090, August.
    15. Beullens, Patrick, 2014. "Revisiting foundations in lot sizing—Connections between Harris, Crowther, Monahan, and Clark," International Journal of Production Economics, Elsevier, vol. 155(C), pages 68-81.
    16. Salma Karray & Chirag Surti, 2016. "Channel coordination with quantity discounts and/or cooperative advertising," International Journal of Production Research, Taylor & Francis Journals, vol. 54(17), pages 5317-5335, September.
    17. Li, Xiuhui & Wang, Qinan, 2007. "Coordination mechanisms of supply chain systems," European Journal of Operational Research, Elsevier, vol. 179(1), pages 1-16, May.
    18. Dimitris Zissis & George Ioannou & Apostolos Burnetas, 2020. "Coordinating Lot Sizing Decisions Under Bilateral Information Asymmetry," Production and Operations Management, Production and Operations Management Society, vol. 29(2), pages 371-387, February.
    19. Boyaci, Tamer & Gallego, Guillermo, 2002. "Coordinating pricing and inventory replenishment policies for one wholesaler and one or more geographically dispersed retailers," International Journal of Production Economics, Elsevier, vol. 77(2), pages 95-111, May.
    20. Chu, Chi-Leung & Leon, V. Jorge, 2008. "Single-vendor multi-buyer inventory coordination under private information," European Journal of Operational Research, Elsevier, vol. 191(2), pages 485-503, December.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:proeco:v:124:y:2010:i:1:p:121-136. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/ijpe .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.