Dynamic pricing in a semi-centralized dual-channel supply chain with a reference price dependent demand and production cost disruption: the case of Iran Khodro Company

Abstract

During the years of imposed sanctions against Iran, Iran Khodro Company (IKCO) got into a hazardous situation due to CKD parts’ purchasing cost increment and emersion of new product variants in the competitive market. To examine such situation, this study examines a multi-period semi-centralized dual-channel supply chain where a common retailer (free market) and two manufacturers’ (IKCO and Saipa as a major competitor) direct channels are confronted with reference price dependent and stochastic demand. The problem is analyzed under Stackelberg and cooperative games scenarios using heuristic algorithm and a League Championship algorithm respectively, as solution methods. Results obtained from solving the problem with IKCO data proves higher profitability of the cooperative game and its remarkable resilience for all products’ memory types i.e. short/long term memory against production cost disruption which is imposed to IKCO in some periods. Besides calculating Saipa’s optimal wholesale price in the disruption periods, our approach with support of experimental analyses is able to assign a supply chain’s degree of resilience against disruptions to its product’s memory type and also power structure.