Research on Quality Investment and Pricing Decision Sequence of Complex Equipment Supply Chain Considering Manufacturer's Incentive Strategy

Abstract

For the demand uncertainty of complex equipment two-stage supply chain, the influence of different quality investment and pricing decision sequence on expected revenue and demand, with the consideration of incentive strategy between manufacturers to suppliers, manufacturer determines the basic quality and compensation for suppliers, suppliers determine the parts wholesale price and quality investment, then manufacturer decides the complex equipment product price. This paper set up two quality investment and price decentralized decision sequence: a Stackelberg game model, a vertical Nash game. Conditions of suppliers decisions are obtained, and the changes of pricing, quality investment, demand and profit of supply chain members are analyzed. It shows that making quality investment and wholesale price decisions simultaneously is best for manufacturers and integrated supply chain; determining quality investment and then set the wholesale price at the same time is the best choice for the whole suppliers. For individual suppliers, there is no absolutely dominant decision-making sequence. By comparing the model and different parameters, the paper provides a management basis for improving the quality and performance of supply chain subjects.