Manufacturer Stackelberg Research Articles

Optimal pricing and offering reward decisions in a competitive closed-loop dual-channel supply chain with recycling and remanufacturing

Recycling of materials has two significant perspectives: it may reduce the waste, and also, it can save raw materials. This study deals with the returned-obsolete products and the fresh items in a closed-loop dual-channel supply chain, where the manufacturer operates the whole production department and sells a percentage of products directly through his online channel, and delivers the rest of them to the retailer at a wholesale price. Additionally, the retailer collects unused items from customers with an appropriate reward to determine whether the customers intend to return the items. Both players screen the condition of the collected materials and then transfer the qualified materials for further use. Our paper formulates a mathematical model to evaluate scenarios such as scenarios manufacturer Stackelberg, Retailer Stackelberg, vertical Nash under the decentralized system, and a centralized system. The study is primarily concerned with finding optimal pricing plans and rewarding the customer analytically under various scenarios. Numerical explorations signify that the manufacturer Stackelberg’s scenario is more economical than the retailer Stackelberg and vertical Nash frameworks. The findings illustrate that the higher acceptance ratios of the returned materials benefit all the members and increase the keenness to return. Also, it is important for members to control the price-sensitive parameters within the demand function in order to save their markets. Further, the study suggests that an increase in production cost forces us to collect more returned materials, regardless of whether the increased remanufacturing cost suppresses that collection.

Decisions of competing supply chain with altruistic retailer under risk aversion

Abstract This paper considers the supply chain composed of altruistic retailers and selfish manufacturers under risk aversion. We use the mean variance (MV) method to construct two types of behavior models. One is a two-stage supply chain model with a single manufacturer and a single retailer, and the other is a competitive supply chain model with two retailers and two manufacturers. We discuss the decision-making problems under manufacturer Stackelberg (MS) game and retailer Stackelberg (RS) game, respectively. We analyze the role of risk aversion and power structure. Results show that the more risk aversion manufacturers are, the lower the emission reduction levels are. It also find that the prices increase with power shift from retailers to manufacturers. Finally, we point out that the competing can help the firms earn more benefits via numerical studies.

Optimizing payment schemes in a decentralized supply chain: A Stackelberg game with quality investment and bank credit

In reality, supply chain members need to determine the best suitable payment scheme when transacting with their business partners. We investigate the optimization of payment schemes with quality investment and bank credit in a decentralized supply chain consisting of one manufacturer and one retailer, both of which are capital-constrained and in need of short-term financing from the bank for their operations. First, we provide a function to describe the market demand by analyzing the impacts of price and quality on the demand. Then, we develop the profit functions of advance payment scheme (APS), normal payment scheme (NPS), and delay payment scheme (DPS) for the capital-constrained manufacturer and retailer. Furthermore, we construct the joint pricing and quality level decision models under APS, NPS, and DPS to determine the optimal profits of the supply chain, manufacturer, and retailer, respectively. On this basis, we conduct theoretical and numerical analyses on the selection of the optimal payment scheme. Our research results in manufacturer Stackelberg game indicate that, the optimal payment scheme from the perspective of supply chain, manufacturer or retailer is not uniquely determined, but generally tends to be DPS. For different perspectives, the optimal payment schemes may be different, and can be affected by the parameters. Especially, for increasing bank rate for the loan of the retailer, the supply chain, manufacturer and retailer generally tend to select DPS. In addition, for increasing bank rate for the loan of the manufacturer, the supply chain and retailer tend to select DPS, but the manufacturer tends to select APS.

Dynamic pricing and inventory management of a dual-channel supply chain under different power structures

This paper studies a periodic review, joint dynamic pricing and inventory problem for a dual-channel supply chain with one manufacturer and one retailer, where the demand is stochastic and price sensitive. Three possible power structures between manufacturer and retailer in the dual-channel supply chain, i.e., Manufacturer Stackelberg, Retailer Stackelberg and Vertical Nash, are considered. Under each of the three power structures, decision models are developed with stochastic dynamic programming to determine how to adjust the pricing and inventory decisions in every period so that each member’s total expected discounted profit over the planning horizon is maximized. The effects of the power structure are analyzed by comparing the optimal dynamic pricing and inventory policies under different power structures. Our main findings include: (i) the optimal dynamic pricing and inventory policy of a dual-channel supply chain is an inventory-dependent base-stock-list-price policy; (ii) base stock levels and reduced prices are affected by starting inventory levels; (iii) the influence rules on reduced prices under different power structures are the same, while the influence rules on base stock levels vary according to the power structure; (iv) optimal pricing and inventory decisions are affected by the power structure, although the structural properties of the optimal policies under different power structures are the same. Results from numerical examples show that, for the two-period dual-channel supply chain, manufacturer and retailer prefer Vertical Nash when the wholesale price is low, while they prefer Manufacturer Stackelberg when the wholesale price is high.

Pricing and Channel Coordination in Online-to-Offline Supply Chain Considering Corporate Environmental Responsibility and Lateral Inventory Transshipment

In this study, we investigate pricing policy and coordination conditions in an online-to-offline supply chain considering corporate environmental responsibility and lateral inventory transshipment. First, we provide demand functions to capture effects of price, corporate environmental responsibility level, and preference degree of the consumer to online channel. Then, we build profit functions and develop three joint pricing and corporate environmental responsibility-level decision models for centralized decision (Scenario CD), retailer Stackelberg game (Scenario RS), and manufacturer Stackelberg game (Scenario MS). Furthermore, we determine the optimal decision policies by solving developed models, and conduct sensitivity analysis of significant factors. Finally, we use a revenue-sharing contract to realize supply chain coordination and find coordination conditions for Scenario RS and MS, and further show the impacts of revenue-sharing rate and investment cost sensitivity on the conditions using numerical studies. We find that optimal joint decision policies can be affected by significant factors to a varying degree. In certain conditions, the revenue-sharing contract can coordinate online-to-offline supply chains considering corporate environmental responsibility and lateral inventory transshipment. Our study proposes a new decision problem, constructs new joint decision models, determines new optimal joint policies, conducts new coordination analysis, and thus contributes to the research on supply chain operations considering corporate environmental responsibility and lateral inventory transshipment.

Impact of government subsidies on green supply chain operation under different power structures

Government subsidies play an important role in the operations of a green supply chain. However, the effectiveness of these subsidies under different power structures has rarely been examined. In this paper, we investigate a two-echelon green supply chain with a manufacturer who obtains government subsidies to develop and produce green products and a retailer who sells to consumers. We examine the impact of government subsidies on green product innovation, supply chain profits, and social welfare by focusing on five power structure models: centralized decision (C), manufacturer-Stackelberg (MS), retailer-Stackelberg (RS), vertical Nash (NL), and vertical Nash with bargaining mechanism (NB) models. The results show that government subsidies have a positive impact on the energy-saving level of green products, firms’ financial performance, and supply chain profits. We also find that the NB model is the optimal power structure of decentralized decision scenarios in terms of green product innovation, supply chain profits, and social welfare. Our findings indicate that if supply chain members have equal power and bargaining mechanisms the effectiveness of government subsidies will be enhanced. This study provides new theoretical insights for green supply chain research by revealing the interplay between the power structure of the green supply chain and government subsidies.

Price and Service Competition in a Dual-Channel Supply Chain with Product Customization

This paper considers a dual-channel supply chain with product customization. One manufacturer and one retailer are involved. The online direct sales channel sells standard and customized products, and the offline retail channel sells standard products. The prices and service levels of products sold via different channels are differentiated, and the customization level which influences the customization cost and choices of customers is decided by the manufacturer. Three game models are proposed: the manufacturer Stackelberg (MS) model, the retailer Stackelberg (RS) model, and the Nash game model. The price and service decisions of the players are derived. Meanwhile, a service-cost-sharing contract is designed for the MS model. The impacts of price and service competition, service cost, and customers sensitivity to the customization level on the optimal decisions are investigated. Through the numerical analysis, we find that, among the three models, the manufacturer Stackelberg model is the most beneficial game structure for the overall supply chain but has the largest revenue gap between the two members. Second, under price competition and service competition, the manufacturer should differentiate the prices and services for direct sales standard products and customized products according to his market status. Third, the manufacturer should increase customization expenditures to construct his customization production line and provide more diversified products when consumers are more sensitive to product customization.

Green Product Design and Pricing Decisions in a Risk-Averse Supply Chain under Alternative Power Structures

Motivated by the prevailing green product design and the different supply chain power structures, this paper aims to analyse the role of power relationship and risk-aversion in economic and environmental performance of sustainable supply chain. Three game theory models, including the manufacturer Stackelberg (MS) model, retailer Stackelberg (RS) model, and vertical Nash (VN) model, are developed to study the pricing and greenness level decisions in a two-echelon sustainable supply chain, where one risk-averse manufacturer sells green products through one risk-averse retailer. This paper shows that when selling through a more risk-averse retailer, the risk-averse manufacturer prefers to provide a product with a higher level of greenness and achieve a greater utility regardless of the power structure. A manufacturer as a follower may have stronger motivation to increase the product’s level of greenness than one in a more balanced supply chain when the green technology investment coefficient is sufficiently low. With regard to the power structure, the channel leadership is not necessary to for the manufacturer to achieve higher utility, which depends on the green technology investment coefficient, greenness level sensitivity, and players’ risk aversion.

Optimal strategies of a dual-channel green supply chain with recycling under retailer promotional effort

Due to the hugely populated world, recycling of the used products has become the most significant perspective in e-commerce. The scientists have been exploring how increases the degree of recyclability and the green innovation level. This paper considers a supply chain with a manufacturer, a retailer, a supplier, and a collector. The manufacturer can increase or decrease the level of green innovation by changing the quality of raw materials. He sells them through his direct channel as well as the retailer’s traditional channel. The retailer enforces the strategy promotional effort for enlarging his market demand. After formulating the problem, the strategies in collector-led, supplier-led, collector–supplier Nash, and collector–supplier–retailer Nash game are studied under manufacturer Stackelberg games along with the centralized policy. The parameters’ sensitivity has been analyzed to the profits and decision variables and then draw significant managerial insights. The model declares the optimal strategies for each player as well as the chain. It is achieved that the higher level of green innovation and promotional effort always increases all the profit. The optimal pricing decisions be lowest under the Collector–Supplier Nash game.

Impact of Information Sharing Modes on the Dual-Channel Closed Loop Supply Chains Under Different Power Structures

In this paper, we develop game-theoretic models regarding dual-channel closed loop supply chain (CLSC) to identify whether the retailer has incentives to share private demand information with the manufacturer and/or the collector, and how different information sharing modes influence the chain members’ operational performances under different channel power structures. Given that the collector recycles used products, four information sharing modes (i.e., no information sharing, information sharing with the manufacturer, information sharing with the collector, and information sharing with both the manufacturer and the collector) are examined in the manufacturer Stackelberg and collector Stackelberg supply chains, respectively. We find that the retailer’s sharing information behavior always benefits for the collector and the entire supply chain. The retailer, however, has no incentive to share demand information voluntarily. As for the manufacturer, the retailer’s sharing information behavior always benefits him in the collector Stackelberg scenario, while may hurt him in the manufacturer Stackelberg scenario. Furthermore, the impact of channel power structure in the four information sharing modes is also discussed. The results show that the manufacturer Stackelberg model or the collector Stackelberg model may be the better structure for chain members depending on the retailer’s demand forecast accuracy.

Online channel strategies under different offline channel power structures

This study explores the manufacturer's marketing and pricing strategies for online channel under different offline channel power structures. Through these strategies, the manufacturer sells products through an offline retailer and an e-tailer. The manufacturer decides the cooperation mode with the e-tailer by the reselling or the agency selling mode and the pricing strategy on the basis of the power structures, i.e., vertical Nash structure (VN), manufacturer Stackelberg structure (MS), and retailer Stackelberg structure (RS). We find the manufacturer selects the online agency selling mode when the commission rate is less than the given threshold. As long as the commission rate is more than another threshold, the manufacturer selects the online reselling mode under the VN structure; however, the manufacturer selects the online agency selling mode under the other two structures. As well, the offline wholesale price is higher under the MS structure than those under the VN and RS structures. When the manufacturer selects the online agency selling mode, the offline retail price is highest under the MS structure, and the online retail price is highest under the VN structure. Meanwhile, consumers can always obtain a higher surplus in the online agency selling mode under all offline power structures.

Pricing Decisions in a Supply Chain Consisting of One Manufacturer and Two Retailers Under a Carbon Tax Policy

Global warming has become an issue of increasing worldwide concern. At present, the most direct way to solve this problem is to control carbon emissions. In our paper, carbon tax policy is injected into a two-stage supply chain consisting of one manufacturer and two retailers. We establish six game models according to the relationship (competitive or cooperative) between the retailers and three power structures (manufacturer Stackelberg (MS), retailer Stackelberg (RS), and vertical Nash (VN)) between the two retailers and the manufacturer. We then adopt the inverse induction method to derive optimal pricing decisions for each model. Optimal profits for supply chain members are obtained. Finally, we analyse: i) the effects of competition and cooperation between the two retailers on equilibrium results; ii) the effects of the three possible power structures existing between the manufacturer and the two retailers on equilibrium results; and especially iii) the effect of the carbon tax rate on pricing decision and the profits of the supply chain. We find that the different power structure and the horizontal relationship between the two retailers have important influence on equilibrium results. Further, the change of carbon tax rate have different influence on pricing under the different power structure and the horizontal relationship between the two retailers. When the government adjusts the carbon tax rate, it should fully consider the different power structure and the horizontal relationship for two-stage supply chain consisting of one manufacturer and two retailers. Although the implementation of the carbon tax policy reduces the corporate profits, it reduces the total carbon emission. The carbon tax policy is helpful to build an environment-friendly and resource-conserving society.

Product bundling and advertising strategy for a duopoly supply chain: a power-balance perspective

The paper studies product bundling in a duopoly supply chain network under the influence of different power-balance structures, bundling decisions and advertising efforts on total supply chain profit. Mathematical models comprising two manufacturers and a single retailer are developed to capture the impact of bundling policy and advertisement strategy under three power-balance structures, namely Manufacturer Stackelberg, Retailer Stackelberg and Vertical Nash. Following game theory models and numerical examples, the study found that the total profit of the supply chain is undifferentiated under the manufacturer Stackelberg and Vertical Nash case in the manufacturer bundling and retailer bundling strategies. However, total supply chain profit under manufacturer bundling strongly dominates under retailer bundling in Retailer Stackelberg and Vertical Nash, and remains valid under multiple settings of market size, price elasticity and advertising elasticity. It is also found that manufacturer bundling is significantly affected by advertising effort compared to retailer bundling. The study contributes to the literature interfacing supply chain and marketing by studying bundling policy and advertising strategy simultaneously for homogenous products, under various power-balance structures and price competition.

Which contract is more effective in improving product greenness under different power structures: Revenue sharing or cost sharing?

In practice, a large number of enterprises tend to cooperate to improve product greenness by various contract mechanisms, such as revenue sharing and cost sharing contracts. The objective of this study is to examine which contract is more effective in motivating enterprises to boost product greenness and benefits them under different power structures. Specifically, we consider a differential game framework where a manufacturer produces a particular green product and sells it to end consumers through a retailer. The manufacturer decides the innovation investment to increase product greenness, and wholesale price, while the retailer sets the retail margin; the manufacturer and the retailer implement a revenue sharing or cost sharing contract under the manufacturer or retailer Stackelberg game, where the sharing proportion is also determined by the retailer. Intuitively, the cost sharing contract would result in higher product greenness since it is widely used to improve the manufacturer’s innovation investment directly. However, our analysis shows that this intuition holds only under the retailer Stackelberg game. When the manufacturer acts as the leader of the Stackelberg game, the revenue sharing contract brings higher product greenness, which makes the manufacturer and the retailer better off. This is because the retailer sets a sufficiently high revenue sharing proportion, which gives the manufacturer additional capital to invest in product innovation. Whereas, the revenue sharing contract hurts the two players under the retailer Stackelberg game. Moreover, we show that a revenue sharing and cooperative investment contract can improve the product greenness and the two players’ profits, relative to one kind of contract under the manufacturer Stackelberg game.

A competitive dual recycling channel in a three-level closed loop supply chain under different power structures: Pricing and collecting decisions

The past two decades witnessed the raise of closed-loop supply chain due to huge attention to the environment and business social responsibility. Both academia and industry have examined recycling and remanufacturing of the used products, due to these concerns complicated by resource scarcity, and government regulations. In this paper, a three-level closed-loop supply chain consisting of a manufacturer, retailer, and third-party collector are considered. The manufacturer builds simultaneously new products from raw materials and remanufactures the returning products. The main idea of the study is to evaluate optimal pricing and collection decisions under channel leadership with two competitive recycling channels including retailer collecting and third-party collector collecting. Based on game theory, four different scenarios are developed - a centralized model and three decentralized models based on the Stackelberg game including Manufacturer Stackelberg, Retailer Stackelberg, and third-party collector Stackelberg. To verify the model, the real case of a TV set producer is studied and then the optimal decisions compared and analyzed in different scenarios. The effect of competition between the retailer and the third-party collector recycling channel has been examined on decision variables, member profits and total profit. A comprehensive sensitivity analysis has been carried out considering the base market size parameter and the sensitivity of demand to retail prices. The examination of the results from the environmental and consumer welfare aspects shows that the retailer leadership decentralized model is often the most effective scenario in closed-loop supply chain, and considering the overall benefit of the supply chain between decentralized models, the retailer leadership model is the best and closest model to the centralized model.

Original design manufacturer's warranty strategy when considering retailers' brand power under different power structures

AbstractIn recent years, the original design manufacturer (ODM) has increasing interests in multichannel cooperation with different retailers. This paper considers the problem in which the ODM cooperates with two competing retailers. The manufacturer produces two substitute products and markets them through two competing retailers. For both products, the manufacturer bundles them with basic warranties and the retailers brand them with their own branding. We quantitatively model the product demands and derive the optimal decisions under two common supply chain power structures: manufacturer Stackelberg and retailer Stackelberg. We observe that when the competition between the two retailers becomes fiercer, the manufacturer charges more for both products, the product substitutability and supply chain power structures do not affect the products' price and warranty decisions, and there does exist a brand ratio interval in which the product branded by the high‐reputation retailer will not get a better warranty from the manufacturer, violating the signalization of the warranty. The leader gets the power to get higher profit while the total profit of the whole supply chain remains the same under both power structures.

Game Theoretical Perspectives on Pricing Decisions in Asymmetric Competing Supply Chains

This paper investigates a dual exclusive channel model in which each manufacturer distributes its goods through a single exclusive retailer, but two goods are substitute. The decision rule between two channels is Nash game in Case 1, while it is Stackelberg game in Case 2. From manufacturer Stackelberg (MS), retailer Stackelberg (RS), and Nash game (VN) theoretic perspectives, nine game models are developed to examine the effect of product substitutability and relative channel status on pricing decisions at both horizontal competition and vertical competition levels. The analysis suggests that the type of price leadership scenarios, the level of product substitutability, and the relative channel status play a significant role in decision making. For instance, in case 1, the symmetric leadership (two manufacturers or two retailers are leaders) is always the dominant strategy and equilibrium for either two manufacturers or two retailers regardless of product substitutability and relative channel status. Nevertheless, the asymmetric leadership may lead channel members to encounter a prisoner’s dilemma if the relative channel status is small. By contrast, in Case 2, the symmetric leadership is not the unique dominant strategy for either two manufacturers or two retailers. In contrast to many earlier results, we also show that whether the first-mover and the late-mover advantages exist, depending on the level of related channel status.

Online channel strategies under different offline channel power structures for the Belt and Road of China

ABSTRACT This paper explores the online channel strategies adopted by Chinese manufacturers with regard to the Belt and Road. It also investigates the effect of offline channel power structures and maritime transportation costs on online channel mode selection and pricing strategies. The offline channel power structures are classified into three types, namely, Chinese manufacturer Stackelberg (MS) structure, vertical Nash (VN) structure, and foreign retailer Stackelberg (RS) structure. Furthermore, a game model is developed among the Chinese manufacturer, foreign retailer, and cross-border e-tailer to investigate the interactions among offline channel power structures, maritime transportation costs, and Chinese manufacturers’ online channel mode selection. The results show that Chinese manufacturers’ preferences for the online agency selling mode increases correspondingly with the decrease in their market position and bargaining power. Moreover, foreign retailers can obtain higher profits in the online agency selling mode under the VN structure. However, the level of profit for foreign retailers depends on the intensity of their competition with cross-border e-tailers under the MS and RS structures. Finally, consumers in countries along the Belt and Road can obtain a higher surplus in the online agency selling mode under all of the structures.

Analysis of Optimal Strategies in a Two-Echelon Digital Products Supply Chain Considering Consumer Types

Considering that the consumers are heterogeneous, we analyze pricing and investment strategies in a two-echelon supply chain of digital products which comprises a manufacturer and a retailer. Firstly, we construct demand function of digital product based on the consumer types by introducing product quality. Three different supply chain models are considered: vertical integration model, Cournot model, and manufacturer Stackelberg model. We study the players’ optimal strategies under these three models and focus on analyzing the effects of the players’ power balance on equilibrium optimal pricing and investment. We find the aggregated profits of both sides and investment cost are the highest in vertical integration model. The price of the digital product is the lowest in vertical integration model in most cases, as the customers hope. Finally, we offer managerial implications and direct the further work.

Decision-making of online channels under three power structures

In recent years, e-commerce has developed rapidly. Many manufacturers are beginning to integrate with the Internet and regard online platforms, such as online marketplaces and self-owned online malls, as important sale channels for their products. Considering the difference of shopping experience between the two online channels, this paper models price and service competition between the two channels. This paper discusses the decisions of supply chain participants with three power structures, that is, the manufacturer Stackelberg game, the online marketplace firm Stackelberg game, and the Nash game. The results show that the channel service level and the consumer sensitivity to channel service positively affect the channel price and demand. We characterize a threshold for the wholesale price. When the wholesale price is below the threshold, the channel prices are lowest in the Nash game, and when the wholesale price is greater than the threshold, the channel prices are lowest when the manufacture acts as the leader. Differentiated services can improve the supply chain participants’ profits and the system’s profit compared with the same service. More interestingly, this paper finds that the online marketplace firm should pay attention to improving its service level, while the manufacturer should pay attention to other work differently, such as focusing on generating promotional value and shaping corporate brand image by the self-owned online mall channel.