Service impact on customer demand and member profit in a supply chain

Abstract

This paper analyzes the impact of provided services by the retailers and manufacturers for customers' demand and members' profit in supply chain. It focuses a supply chain structure with one manufacturer and a common retailer. The demands of customers depend on retailer price and service level. A game-theoretic framework is applied to obtain the equilibrium solutions for every entity in supply chain.In order to investigate the impact of service on the demand and supply chain members' profit, when the manufacturer is a leader, we derive and compare equilibrium solutions for the supply chain under three different scenarios. Theses scenarios are for the case that manufacturer and retailer do not provide any service to customers; the case that retailer provides service to customers; and the case that manufacturer provides service to customers. We compared the results from these three scenarios and proposed the best scenario for our problem.