Modeling of the supply chain of cooperative game between two tiers of retailer and manufacturer under conditions of uncertainty

Abstract

The design of a repurchase agreement related to the amount of goods remaining in the two-echelon supply chain between the retailer and the manufacturer is examined. Two scenarios are considered quite separately; In the first scenario (decentralized) in which the retailer determines the price of the product and the optimal amount of the economic order and the producer is persuaded to follow this method. In the second (centralized) scenario, the goal is to maximize the profit of the whole chain, in which case the price of the product and the amount of the economic order are determined based on the profit of the whole chain. Then, a model of repurchase agreement related to the remaining goods was considered based on cooperative play and contract between two members of the supply chain, in which the goal is to maximize the profit of chain members. Due to the uncertainty of the competitive environment, the demand is considering under uncertain in modeling to determine the optimal level of cooperation in a competitive and cooperative market. The results of the implementation of this contract in a numerical example showed that the profit of the whole chain and the amount of economically optimal order in the centralized state increased compared to the decentralized state and the optimal price of the product decreased. Due to the fact that in the decentralized state the retailer determines the values of the optimal variables, the profit of this member decreases in the centralized state and the producer's profit increases.