Abstract
This paper examines the pricing and joint investment decisions of a two-echelon supply chain with a manufacturer and a retailer under power structures. A manufacturer invests in a specific quality level to produce a quality product. Meanwhile, a retailer invests in the extended warranty service provision as an after-sales service. This study investigates the interplay of these two investments assuming two heterogeneous customer demands exist. Three decision-making analytical power structure models are developed, namely centralized, manufacturer-led decentralized, and retailer-led decentralized models. In both decentralized models, the Stackelberg game determines the optimal price and investment decisions to maximize member's profit. However, independently optimal decision-making with these models does not coordinate the supply chain and its members. Thus, this study proposes wholesale price contracts considering power structures to coordinate effectively and achieve a win–win situation. A numerical analysis has been performed to determine the optimal level for quality investment, extended warranty length, pricing, and supply chain performance. Furthermore, a sensitivity analysis explores key parameter's impact on heterogeneous customer demands and supply chain performance.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
