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Coordinating pricing and inventory decisions in a multi-level supply chain: A game-theoretic approach

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  • Huang, Yun
  • Huang, George Q.
  • Newman, Stephen T.

Abstract

This paper concerns coordination of enterprise decisions such as suppliers and components selection, pricing and inventory in a multi-level supply chain composed of multiple suppliers, a single manufacturer and multiple retailers. The problem is modeled as a three-level dynamic non-cooperative game. Analytical and computational methods are developed to determine the Nash equilibrium of the game. Finally, a numerical study in computer industry is conducted to understand the influence of the market scale parameter and the components selection strategy on the optimal decisions and profits of the supply chain as well as its constituent members. Several research findings have been obtained.

Suggested Citation

  • Huang, Yun & Huang, George Q. & Newman, Stephen T., 2011. "Coordinating pricing and inventory decisions in a multi-level supply chain: A game-theoretic approach," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 47(2), pages 115-129, March.
    • Handle: RePEc:eee:transe:v:47:y:2011:i:2:p:115-129
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    Citations

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    Cited by:

    1. Venegas, Bárbara B. & Ventura, José A., 2018. "A two-stage supply chain coordination mechanism considering price sensitive demand and quantity discounts," European Journal of Operational Research, Elsevier, vol. 264(2), pages 524-533.
    2. Yang, Lei & Zhang, Qin & Ji, Jingna, 2017. "Pricing and carbon emission reduction decisions in supply chains with vertical and horizontal cooperation," International Journal of Production Economics, Elsevier, vol. 191(C), pages 286-297.
    3. Ventura, José A. & Bunn, Kevin A. & Venegas, Bárbara B. & Duan, Lisha, 2021. "A coordination mechanism for supplier selection and order quantity allocation with price-sensitive demand and finite production rates," International Journal of Production Economics, Elsevier, vol. 233(C).
    4. Adeinat, Hamza & Ventura, Jose A., 2018. "Integrated pricing and supplier selection in a two-stage supply chain," International Journal of Production Economics, Elsevier, vol. 201(C), pages 193-202.
    5. Adeinat, Hamza & Ventura, José A., 2015. "Determining the retailer's replenishment policy considering multiple capacitated suppliers and price-sensitive demand," European Journal of Operational Research, Elsevier, vol. 247(1), pages 83-92.
    6. Mohammaditabar, Davood & Ghodsypour, Seyed Hassan & Hafezalkotob, Ashkan, 2016. "A game theoretic analysis in capacity-constrained supplier-selection and cooperation by considering the total supply chain inventory costs," International Journal of Production Economics, Elsevier, vol. 181(PA), pages 87-97.
    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. Adrian Patrick Kennedy & Suresh P. Sethi & Chi Chung Siu & Sheung Chi Phillip Yam, 2021. "Cooperative Advertising in a Dynamic Three‐Echelon Supply Chain," Production and Operations Management, Production and Operations Management Society, vol. 30(11), pages 3881-3905, November.
    9. Yang, Dong & Jiao, Jianxin (Roger) & Ji, Yangjian & Du, Gang & Helo, Petri & Valente, Anna, 2015. "Joint optimization for coordinated configuration of product families and supply chains by a leader-follower Stackelberg game," European Journal of Operational Research, Elsevier, vol. 246(1), pages 263-280.
    10. Saeed Alaei & Masoud Behravesh & Nayere Karegar, 2014. "Analysis of Production - Inventory Decisions in a Decentralized Supply Chain," Prague Economic Papers, Prague University of Economics and Business, vol. 2014(2), pages 198-216.
    11. Liu, Xiaotong & Zhang, Kai & Chen, Bokui & Zhou, Jun & Miao, Lixin, 2018. "Analysis of logistics service supply chain for the One Belt and One Road initiative of China," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 117(C), pages 23-39.
    12. Noori-Daryan, Mahsa & Taleizadeh, Ata Allah & Jolai, Fariborz, 2019. "Analyzing pricing, promised delivery lead time, supplier-selection, and ordering decisions of a multi-national supply chain under uncertain environment," International Journal of Production Economics, Elsevier, vol. 209(C), pages 236-248.
    13. Fidel Torres & César García-Díaz, 2018. "Evolutionary dynamics of two-actor VMI-driven supply chains," Computational and Mathematical Organization Theory, Springer, vol. 24(3), pages 351-377, September.
    14. Andrew Henry & Christian Wernz, 2015. "A multiscale decision theory analysis for revenue sharing in three-stage supply chains," Annals of Operations Research, Springer, vol. 226(1), pages 277-300, March.
    15. Seyed Reza Moosavi Tabatabaei & Seyed Jafar Sadjadi & Ahmad Makui, 2017. "Optimal pricing and marketing planning for deteriorating items," PLOS ONE, Public Library of Science, vol. 12(3), pages 1-21, March.
    16. B. C. Giri & A. Chakraborty & T. Maiti, 2017. "Effectiveness of consignment stock policy in a three-level supply chain," Operational Research, Springer, vol. 17(1), pages 39-66, April.

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