Joint Decision on Ordering and Pricing of Cruise Tourism Supply Chain with Competing Newsboy-Type Retailers

Abstract

Cruise industry has recorded rapid expansion during the last decades, and it has substantial contribution to local economies. In this paper, we introduce a cruise tourism supply chain system consisting of one supplier and two newsboy-type retailers. We investigate the optimal decisions in a decentralized system from a game theoretical perspective and find out the optimal ordering and pricing strategies of both retailers and the optimal wholesale prices of the supplier with the limited number of cruise tickets and try to find out how the total profits should be allocated by the two retailers in the alliance case. Our framework involves two operational strategies, including inconsistent wholesale prices in the benchmark case and consistent wholesale price in the alliance case in which the two retailers have a virtual alliance, combining to one retailer. A numerical example compares the performance of the supply chain members and the system in two cases and finds that it is better for the two retailers to have a virtual alliance, combining to one retailer when the total amount of cruise tickets ordered by the two retailers is constrained by the total number of cruise tickets for the supplier, but it is not good choice for the two retailers to combine to one retailer when the total number of cruise tickets for the supplier does not constrain the total amount of cruise tickets ordered by the two retailers. In addition, the performance of the system in the alliance case is as good as that in the benchmark case when the total amount of cruise tickets ordered by the two retailers is constrained by the total number of cruise tickets for the supplier. However, when the total number of cruise tickets for the supplier does not constrain the total amount of cruise tickets ordered by the two retailers, the performance of the system in the benchmark case is better than that in the alliance case.