Abstract
The paper studied the process of product renewal in a supply chain, which is composed of one manufacturer and one retailer. There are original product and renewal product in the supply chain. A market share shift model for renewal product was firstly built on a increment function and a shift function. Based on the model, the decision-making plane consisting of two variables was divided into four areas. Since the process of product renewal was divided into two stages, Stackelberg-Nash game model and Stackelberg-merger game model could be built to describe this process. The optimal solutions of product pricing strategy of two games were obtained. The relationships between renewal rate, cost, pricing strategy, and profits were got by numerical simulation. Some insights were obtained from this paper. Higher renewal rate will make participants’ profits and total profit increase at the same margin cost. What is more important, the way of the optimal decision making of the SC was that RP comes onto the market with a great price differential between OP and RP.
Highlights
With the development of IT, the speed of product renewal process becomes faster and faster
RP comes onto the market with a great price differential, and so the profits of all products are the highest; that is, area III is the optimal pricing area of supply chain
This paper studied the process of product renewal
Summary
With the development of IT, the speed of product renewal process becomes faster and faster This situation brings some new problems to traditional supply chain (SC), such as the dynamic nature of an SC and the relationship coordination between participants of an SC. M. had proposed a new product expansion model and studied the process of multigeneration renewal products coming onto market [6, 7]. Luo and Tu studied a price decision problem for product renewal supply chain based on Nash game [13]. The change of market share caused by product renewal in the SC is studied in this paper. This paper firstly studied Stackelberg game for product renewal, aiming at solving complex decision-making question in actual renewal SC, and obtained some novel insights.
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