Cooperative advertising in manufacturer-retailer relationships with considering inventory costs

This paper considers a manufacturer and retailer's behaviours in a two-level supply chain under cooperative and non-cooperative relationships. The non-cooperative relationships are modelled through three games including Stackelberg-manufacturer, Stackelberg-retailer, and Nash game; moreover, the cooperative relationships are modelled by one cooperative game. In the two-level supply chain, the demand is sensitive to national brand name advertising, local advertising, and price. Furthermore, inventory costs including holding costs, shortage costs, and ordering costs are considered. The aim of this research is to compare the members' behaviours and profits in the different types of relationships, and in a situation, we find out whether the members prefer to transfer from a game to another game or not. A numerical example is presented in an effort to analyse the members' decision in the different types of relationships; in addition, a method is presented in order to improve variables, which are determined by a contract.