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Dynamic model of a supply chain network with sticky price

Author

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  • Zhaobo Chen

    (Taiyuan University of Science and Technology)

  • Chunying Tian

    (Harbin University of Science and Technology)

  • Ding Zhang

    (State University of New York)

  • Dongyan Chen

    (Harbin University of Science and Technology)

Abstract

This article aims at studying the strategic behaviours of competing firms with sticky retail pricing for the product. We base our study in the context of a supply chain network comprising multiple manufacturers and retailers. The manufacturers are involved in the production of a homogeneous product while the retailers purchase the product and sell it to consumers in the end markets. The retail price of the product is sticky. A differential variational inequality model is proposed to handle the multiple agents and their independent behaviours. Furthermore, the existence and uniqueness of the solution to the dynamic supply chain network with sticky price are shown. A numerical example is provided to illustrate the model and the computational results of equilibrium behaviour are presented. This paper contributes to literature by introducing price stickiness into supply chain networks and developing a differential variational inequality model to analyze the dynamic strategies of firms in the decentralized supply chain network.

Suggested Citation

  • Zhaobo Chen & Chunying Tian & Ding Zhang & Dongyan Chen, 2020. "Dynamic model of a supply chain network with sticky price," Operational Research, Springer, vol. 20(2), pages 649-670, June.
    • Handle: RePEc:spr:operea:v:20:y:2020:i:2:d:10.1007_s12351-017-0354-1
    DOI: 10.1007/s12351-017-0354-1
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    References listed on IDEAS

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