A cooperative advertising collaboration policy in supply chain management under uncertain conditions

Abstract

Many industries are facing big challenges to design supply chains in a way to maximize the profit and meet the heightened expectations of the customer. This new era entirely relies on the dynamic advantages of competition and the role played by the collaboration policy. A global economy and increasing demand have put a huge pressure on supply chain partners to build a collaboration policy based on price, order quantity, and advertising. Companies are adopting the idea of ”shaking hands” to obtain more profit instead of taking risks through competition. Cooperative (co-op) advertising is a significant policy of centralized supply chain management (SCM) to boost the revenues generated by the supplier, manufacturer, and retailers. The uncertain costs associated with the supply chain management also create obstacles in economic analysis and feasibility. These uncertainties are associated with the basic costs of all supply chain partners, which are represented using a signed distance formula. This paper develops the concept of co-op advertising among the supplier, manufacturer, and retailers with a variable demand driven by selling price and advertising costs, where all basic costs are considered as fuzzy. The profit is optimized by considering variable cycle time, shipments, pricing and advertising costs for the decision support system of the supply chain management. The optimal results of the co-op advertisement ensured an increase in the revenue of whole supply chain.