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Paper Information

Journal:   INTERNATIONAL JOURNAL OF INDUSTRIAL ENGINEERING AND PRODUCTION RESEARCH (IJIE) (ENGLISH)   JUNE 2016 , Volume 27 , Number 1; Page(s) 43 To 59.
 
Paper: 

OPTIMAL PRICING AND ADVERTISING DECISIONS IN A THREE-LEVEL SUPPLY CHAIN WITH NASH, STACKELBERG AND COOPERATIVE GAMES

 
 
Author(s):  ESMAEILI P., RASTI BARZOKI M.*, HEJAZI S.R.
 
* DEPARTMENT OF INDUSTRIAL AND SYSTEM ENGINEERING, ISFAHAN UNIVERSITY OF TECHNOLOGY, ISFAHAN 84156-83111, IRAN
 
Abstract: 

Pricing and advertising are two important marketing strategies in the supply chain management which lead to increase customer demand, therefore higher profit for members of supply chains. This paper considers advertising, and pricing decisions simultaneously for a three-level supply chain with one supplier, one manufacturer and one retailer. The amount of market demand is influenced by pricing and advertising. In this paper, three well-known approaches in the game theory including the Nash, Stackelberg and Cooperative games are exploited to study the effects of pricing and advertising decisions on the supply chain. Using these approaches, we identify optimal decisions in each case for the supplier, the manufacturer and the retailer. Also, we compare the outcomes decisions among the mentioned games. The results show that, the Cooperative and the Nash games have the highest and lowest advertising expenditure, respectively. The price level in the Nash game is more than the Stackelberg game for all three levels, and the retailer price in the Stackelberg and Cooperative games are equal. The system has the highest profit in the Cooperative game. Finally, the Nash bargaining model will be presented and explored to investigate the possibilities for profit sharing.

 
Keyword(s): THREE-LEVEL SUPPLY CHAIN, ADVERTISING, PRICING, GAME THEORY
 
References: 
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