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The Equilibrium Decisions in a Two-Echelon Supply Chain under Price and Service Competition

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Listed:
  • Xiaonan Han

    (Department of Mathematics, Tianjin University, Tianjin 300072, China)

  • Xiaochen Sun

    (Department of Mathematics, Tianjin University, Tianjin 300072, China)

  • Yancong Zhou

    (School of Information Engineering, Tianjin University of Commerce, Tianjin 300134, China)

Abstract

This article studies a supply chain composed of a manufacturer and two competing retailers. The manufacturer produces two substitutable products and offers respective service levels to customers who buy one of the two products. Each retailer can only order one kind of product from the manufacturer, and then sell them to the market at a certain sale price. The demands for two products are influenced not only by the service levels the manufacturer provides, but also the sales prices of the two products. Furthermore, we investigate the equilibrium behavior of members in the supply chain with the aid of the Stackelberg game, and discover a number of insights concerning some important parameters. Finally, Numerical analysis is presented to validate our theoretical results and compare channel performances.

Suggested Citation

  • Xiaonan Han & Xiaochen Sun & Yancong Zhou, 2014. "The Equilibrium Decisions in a Two-Echelon Supply Chain under Price and Service Competition," Sustainability, MDPI, vol. 6(7), pages 1-16, July.
    • Handle: RePEc:gam:jsusta:v:6:y:2014:i:7:p:4339-4354:d:38123
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    References listed on IDEAS

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    1. S. Chan Choi, 1991. "Price Competition in a Channel Structure with a Common Retailer," Marketing Science, INFORMS, vol. 10(4), pages 271-296.
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    3. Hsieh, Chung-Chi & Wu, Cheng-Han, 2009. "Coordinated decisions for substitutable products in a common retailer supply chain," European Journal of Operational Research, Elsevier, vol. 196(1), pages 273-288, July.
    4. Xiao, Tiaojun & Yang, Danqin, 2008. "Price and service competition of supply chains with risk-averse retailers under demand uncertainty," International Journal of Production Economics, Elsevier, vol. 114(1), pages 187-200, July.
    5. Wu, Cheng-Han, 2012. "Price and service competition between new and remanufactured products in a two-echelon supply chain," International Journal of Production Economics, Elsevier, vol. 140(1), pages 496-507.
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    7. Yang, Shan-Lin & Zhou, Yong-Wu, 2006. "Two-echelon supply chain models: Considering duopolistic retailers' different competitive behaviors," International Journal of Production Economics, Elsevier, vol. 103(1), pages 104-116, September.
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    Cited by:

    1. Gao Xiang Lou & Hai Yang Xia & Jie Qiong Zhang & Ti Jun Fan, 2015. "Investment Strategy of Emission-Reduction Technology in a Supply Chain," Sustainability, MDPI, vol. 7(8), pages 1-25, August.
    2. Chun-Hung Chiu & Gang Hao & Xin Dai & Hang Xie, 2020. "Inventory sharing of professional optics product supply chain with equal power agents," Annals of Operations Research, Springer, vol. 291(1), pages 169-194, August.
    3. Xiaoxu Chen & Peng Xu & Thomas Walker & Shengzhong Huang, 2019. "Pricing and Ordering Decisions in a Retailer Dominant Channel Involving a Third-Party Logistics Provider," Complexity, Hindawi, vol. 2019, pages 1-15, July.
    4. B. C. Giri & B. R. Sarker, 2016. "Coordinating a two-echelon supply chain under production disruption when retailers compete with price and service level," Operational Research, Springer, vol. 16(1), pages 71-88, April.
    5. Qiu Zhao, 2019. "The Influence of Buyer Power on Supply Chain Pricing with Downstream Competition," Sustainability, MDPI, vol. 11(10), pages 1-19, May.
    6. Tsan-Ming Choi & Yongjian Li, 2015. "Sustainability in Fashion Business Operations," Sustainability, MDPI, vol. 7(11), pages 1-7, November.

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