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A Dynamic Game Of Operations And Marketing Management In A Supply Chain

Author

Listed:
  • FOUAD EL OUARDIGHI

    (Department of Operations Management, ESSEC Business School, Avenue Bernard Hirsch, B.P. 105, 95021, Cergy Pontoise, France)

  • STEFFEN JØRGENSEN

    (Department of Business and Economics, University of Southern Denmark, Campusvej 55, DK-5230, Odense, Denmark)

  • FEDERICO PASIN

    (Department of Production and Operations Management, HEC Montreal, 3000 Chemin de la Côte-Sainte-Catherine, Montréal (Québec), Canada, H3T 2A7, Canada)

Abstract

The aim of the paper is to study some important differences between (classical) non-cooperative and (modern) cooperative supply chain management. For this purpose, the paper develops a differential game model involving operations and marketing activities that are performed by a manufacturer and a retailer in a simple two-member supply chain. We consider a particular single brand of the manufacturer. The manufacturer decides on production volume, production process improvement and national advertising efforts, while the retailer decides her purchase volume by the manufacturer and her pricing policy toward the final consumers. A revenue sharing contract is employed in the non-cooperative setting. Among the issues addressed on the manufacturer side are the trade-off between production and process improvement activities, the path of inventory over time, and the trade-off between attracting new customers and improving the loyalty of current customers. For the retailer we study the inventory and price evolution over time.

Suggested Citation

  • Fouad El Ouardighi & Steffen Jørgensen & Federico Pasin, 2008. "A Dynamic Game Of Operations And Marketing Management In A Supply Chain," International Game Theory Review (IGTR), World Scientific Publishing Co. Pte. Ltd., vol. 10(04), pages 373-397.
    • Handle: RePEc:wsi:igtrxx:v:10:y:2008:i:04:n:s021919890800200x
    DOI: 10.1142/S021919890800200X
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    References listed on IDEAS

    as
    1. Konstantin Kogan & Charles S. Tapiero, 2007. "Supply Chain Games: Operations Management And Risk Valuation," International Series in Operations Research and Management Science, Springer, number 978-0-387-72776-9, April.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Lu, Lijue & Navas, Jorge, 2021. "Advertising and quality improving strategies in a supply chain when facing potential crises," European Journal of Operational Research, Elsevier, vol. 288(3), pages 839-851.
    2. Sacco, Armando & De Giovanni, Pietro, 2019. "Channel coordination with a manufacturer controlling the price and the effect of competition," Journal of Business Research, Elsevier, vol. 96(C), pages 97-114.
    3. De Giovanni, Pietro & Zaccour, Georges, 2023. "A survey of dynamic models of product quality," European Journal of Operational Research, Elsevier, vol. 307(3), pages 991-1007.
    4. Fouad El Ouardighi & Gary Erickson & Dieter Grass & Steffen Jørgensen, 2016. "Contracts and Information Structure in a Supply Chain with Operations and Marketing Interaction," International Game Theory Review (IGTR), World Scientific Publishing Co. Pte. Ltd., vol. 18(04), pages 1-36, December.
    5. Pietro Giovanni & Maria Roselli, 2012. "Overcoming the drawbacks of a revenue-sharing contract through a support program," Annals of Operations Research, Springer, vol. 196(1), pages 201-222, July.
    6. Pietro Giovanni, 2017. "Closed-loop supply chain coordination through incentives with asymmetric information," Annals of Operations Research, Springer, vol. 253(1), pages 133-167, June.
    7. De Giovanni, Pietro, 2021. "Smart Supply Chains with vendor managed inventory, coordination, and environmental performance," European Journal of Operational Research, Elsevier, vol. 292(2), pages 515-531.
    8. Dass, Mayukh & Reshadi, Mehrnoosh & Li, Yuewu, 2023. "An exploration of ripple effects of advertising among major suppliers in a supply chain network," Journal of Business Research, Elsevier, vol. 169(C).
    9. De Giovanni, Pietro & Karray, Salma & Martín-Herrán, Guiomar, 2019. "Vendor Management Inventory with consignment contracts and the benefits of cooperative advertising," European Journal of Operational Research, Elsevier, vol. 272(2), pages 465-480.
    10. Song, Jian & Chutani, Anshuman & Dolgui, Alexandre & Liang, Liang, 2021. "Dynamic innovation and pricing decisions in a supply-Chain," Omega, Elsevier, vol. 103(C).
    11. Pietro Giovanni, 2014. "Environmental collaboration in a closed-loop supply chain with a reverse revenue sharing contract," Annals of Operations Research, Springer, vol. 220(1), pages 135-157, September.
    12. Pietro De Giovanni, 2020. "An optimal control model with defective products and goodwill damages," Annals of Operations Research, Springer, vol. 289(2), pages 419-430, June.
    13. Fouad El Ouardighi & Konstantin Kogan, 2013. "Dynamic conformance and design quality in a supply chain: an assessment of contracts’ coordinating power," Annals of Operations Research, Springer, vol. 211(1), pages 137-166, December.

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    More about this item

    Keywords

    Supply chain management; operations; marketing; revenue sharing contract; dynamic games;
    All these keywords.

    JEL classification:

    • B4 - Schools of Economic Thought and Methodology - - Economic Methodology
    • C0 - Mathematical and Quantitative Methods - - General
    • C6 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling
    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • D5 - Microeconomics - - General Equilibrium and Disequilibrium
    • D7 - Microeconomics - - Analysis of Collective Decision-Making
    • M2 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics

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