Manufacturer's Wholesale Price Research Articles

Optimal strategies for green investment, sharing contract and advertisement effort in a supply chain coordination problem

The global environment is experiencing increasingly rapid pollution due to the presence of harmful products generated by human activities, the emissions from vehicular traffic, and the release of carbon dioxide from industrial sources. To save this beautiful earth as well as human beings, it is necessary to reduce pollution by producing eco-friendly products and reducing reckless carbon emissions from industry. Furthermore, advertising serves as a very efficacious strategy for promoting sustainable green products and encouraging customer engagement. In response to the current circumstances, a supply chain model including a manufacturer, a retailer, and customers is devised, incorporating investments in green practices and advertising. This study examines the relationship between client demand and three key factors: marketing effort, the product's green level, and the selling price. In addition, a sharing contract policy between the manufacturer and the retailer on green investment costs is applied in this model. The main focus of this study is to find the optimal values of advertisement effort, the product's green level, the manufacturer's wholesale price, the retailer's selling price and the sharing percentage of green investment that maximize the profits of the retailer and manufacturer, as well as the integrated supply chain system of the proposed model. In order to demonstrate the practical significance of the concept, a numerical example is solved and then a comparative analysis is conducted. Moreover, sensitivity studies are performed to assess the impact of different model parameters on decision factors and profitability. In conclusion, this study provides management insights and offers some closing observations, along with suggestions for future research directions. The findings indicate that the implementation of a sharing contract policy yields more earnings to the participants in the supply chain compared to a decentralized situation. The centralized strategy in supply chain management (SCM) results in higher joint earnings for the manufacturer and the retailer compared to the decentralized and sharing contract policies.

Signaling green capability with wholesale price or certification

With the rise of environmentally conscious consumers in the digital age, e-commerce platforms have a significant potential to promote green products through marketing. However, these platforms may face information asymmetry regarding the green production and operational capabilities of their manufacturing suppliers, which could hinder optimal marketing efforts. This study explores how manufacturers with high green capabilities can signal their private information to platforms to receive more green marketing support. We first analyze the traditional signaling mechanism using wholesale prices and then examine how the addition of green certification can facilitate the signaling process. We derive the supply chain equilibria under both signaling mechanisms. Our results show that a single wholesale price signal can substantially distort the manufacturer's wholesale price upward, leading to a significant deviation of the retail platform's pricing and marketing decisions from the optimal levels in a symmetric information scenario. However, adding green certification signals can mitigate this undesirable distortion and reduce the efficiency lost due to information asymmetry. Both signaling mechanisms can exacerbate the double marginalization effect, which can be mitigated to a smaller extent by adding green certification in the signaling contract. Our study highlights the signaling role of green certification in the supply chain and sheds light on the practical value of adopting green certifications.

An Investment and Loan Financing Decision Equilibrium in Supply Chain

A financing model for bank loan financing, equity financing, and portfolio financing under the manufacturer's capital constraints is constructed, and the manufacturer's capital level and consumers are discussed in green preference on pricing, green input level, market demand for products, and selection strategies of financing methods. Finally, it is verified by numerical analysis. Consumers' green preference is positively correlated with retail prices, wholesale prices and the level of green investment efforts, market demand for products, and equity transfer ratios acceptable to both parties in equity financing; when the manufacturer's capital constraints are not financing, the manufacturer's initial capital level is positively correlated with manufacturer's wholesale price, and retailer's retail price are negatively correlated, but it is positively correlated with the level of green investment efforts; the greater the bank loan interest rate, the larger the manufacturer's acceptable share transfer ratio.

Pricing and assembly rate decisions for a prefabricated construction supply chain under subsidy policies.

Prefabricated construction has attracted worldwide concern and promotion due to its environmental friendliness, high quality, and high efficiency. In China, the application of prefabricated construction still lags due to its high cost. To improve prefabricated construction development, the Chinese government and provinces have launched subsidy policies for different objects that offer subsidies to the assembler, the manufacturer, or consumers. Subsidy policies for different subsidy objects have different impacts on the manufacturer wholesale price and assembler retail price and assembly rate and make their decisions more complicated. Therefore, this study uses game theory and builds three models to analyze the effects of government subsidies on manufacturer pricing, assembler pricing, assembly rate decisions, and profit. We find that government subsidy policies can bring more profit to prefabricated construction enterprises, reduce their costs, and benefit the promotion of prefabricated construction. Through comparison and numerical analysis, we also find that when the government subsidizes enterprises more, it is better to subsidize the assembler, because it is good for all three parties. First, consumers can obtain a lower retail price. Second, enterprises can obtain more profits. Finally, for the government, this approach can increase the demand for prefabricated construction and increase the assembly rate, which is conducive to the promotion of prefabricated construction. When the government subsidizes customers more, it is better for the assembler and the manufacturer to subsidize customers, because they can obtain more profits. It is better for the government and customers to subsidize the assembler or the manufacture, because consumers can get the lower retail price. Although the assembly rate and enterprises’ profits are not optimal, they have also been improved. In addition, when the government directly subsidizes enterprises, the enterprises will actively cooperate with the subsidy policy and are more willing to adopt prefabricated construction. This approach will benefit the promotion of prefabricated construction.

Study on Dual-channel Supply Chain Game Under Carbon Subsidy Policy

In this work, dual-channel supply chain price models and their optimal strategy were studied under government low-carbon innovative subsidies. The decision-making mechanism and complex dynamical characteristics of manufacturer's wholesale price and retailers’ sales commissions were discussed. The results showed that when the government implements low-carbon subsidy policy, the change of price adjustment coefficient of manufacturer, online and offline retailers will lead to the instability of system, and manufacturer has more influence on the price system than retailers. Consumers’ low-carbon preference is conducive for manufacturer and retailers to increase sales prices, but if consumers over pursue low-carbon products, the price system will also fall into chaos, which will cause fluctuations and losses in profits of supply chain members.

Information sharing motivated by production cost reduction in a supply chain with downstream competition

AbstractThis paper studies demand information sharing in a two‐echelon supply chain consisting of one manufacturer and two retailers, an informed retailer and an uninformed retailer. The retailers engage in Cournot competition or Bertrand competition. The manufacturer can conduct cost reduction, while the informed retailer has the decision power to opt for a sharing format, among no sharing, partial sharing (only with the manufacturer), and full sharing. Under partial sharing, the uninformed retailer infers the demand information from the manufacturer's wholesale price. We find that the inference effect, that is, the presence of the manufacturer's pricing distortion, depends on the manufacturer's cost‐reduction efficiency and the retailers' competition mode. Under low cost‐reduction efficiency, the inference effect makes the retailers worse off in quantity competition, whereas it is beneficial to them in price competition. On the contrary, under high efficiency, the retailers benefit from the inference effect in quantity competition, whereas they become worse off in price competition. By contrast, the inference effect only makes the manufacturer worse off. The uninformed retailer may prefer partial sharing to full sharing, while the informed retailer may be indifferent between full sharing and partial sharing.

Green Supply Chain Decisions Under Different Power Structures: Wholesale Price vs. Revenue Sharing Contract.

In the market, once consumers have a low-carbon preference, they will choose green low-carbon products. The market demand for green products is not only related to product price, but also consumers’ low-carbon preference. In this way, enterprise has to consider the cost of carbon emissions in the process of production and operation. In this paper, we consider a two-level supply chain system composed of a manufacturer and a retailer. The supply chain system can determine the price of products and the level of carbon emission reduction through different supply chain contracts: wholesale price contract and revenue sharing contract. However, the power control structure of a manufacturer and a retailer is different, which will further affect the decision-making strategy of the supply chain system. We set up four models (Wholesale Price—NM and NR, and Revenue-Sharing—SR and SM) of the supply chain with carbon emission reduction, and calculated and analyzed. The results show that firstly, regardless of whether the manufacturer’s power control structure or the retailer power structure is dominant, the manufacturer wholesale price with a contract on revenue-sharing is always higher than on wholesale price, and it is inversely proportional to the revenue-sharing proportion. Secondly, under the two power control structures, the carbon emission level of the manufacturer with a contract on revenue-sharing is always lower than on wholesale price, and it gradually decreases with the increase of the revenue-sharing proportion of the manufacturers. Thirdly, when the retailer dominates the supply chain, the retailer selling price with a contract on revenue-sharing is always higher than on wholesale price. Under the manufacturer’s power control structure, when the revenue-sharing ratio is small, the retailer selling price with a contract on revenue-sharing is higher than on wholesale price; when the revenue-sharing ratio is large, the retailer selling price with a contract on revenue-sharing is lower than on wholesale price. Finally, the validity of the model is verified by an example, and the sensitivity of the parameters is analyzed.

Evaluating Manufacturer's Wholesale Price Policy Under Order Postponement With Buyback Option

In this article, a decentralized newsvendor model is analyzed in the presence of demand uncertainty, where the retailer wishes to postpone his ordering decision by few days until the most accurate demand information is available. The impact of such order postponement on the equilibrium profits of both manufacturer and retailer with and without a buyback contract is subsequently examined to obtain a range of wholesale prices within which the marginal profits for both manufacturer and retailer which are non-negative. Furthermore, it is observed that the possibility of implementing order postponement is higher when it is done in the presence of a buyback contract as it increases the marginal profits for both manufacturer and the retailer and expands the feasible region of wholesale price, which leads to a provision of higher flexibility for negotiation between the manufacturer and the retailer.

Supply chain enterprise operations and government carbon tax decisions considering carbon emissions

The reduction of carbon emissions is a world-wide concern. Many countries have implemented various policies to reduce carbon emissions, which has affected the operational decisions of enterprises in the supply chain since most carbon is emitted during the production process. In this paper, the mutual relationship between supply chain enterprise operations and government policy are considered. Governmental carbon emission tax policies are examined using the three-stage Stackelberg game model with a decentralized supply chain and the two-stage Stackelberg game model with a centralized supply chain. The optimal strategies of enterprises and governments are theorized for both types of supply chains. In the decentralized supply chain, a product's retail price and the government's carbon tax are higher than those in centralized decision-making mode. In the centralized supply chain, the stocking factor of the retailer, the profit of the supply chain and the expected social welfare of the government are higher than those in decentralized supply chain. With the increase of carbon emissions tax, the wholesale price of manufacturer and retailing price of retailer under the decentralized supply chain, as well as retailing price of retailer under centralized supply chain increase. The results indicate that the centralized supply chain is more beneficial to enterprises and government than the decentralized supply chain. By performing the comparisons of the manufacturer-dominated supply chain with retailer-dominated and no agent dominated supply chains, it is shown that both the environment performance and financial performance of supply chain are better off when the supply chain members have distributed pricing powers.

Exploring the effects of social responsibility on coordination and profit division in a supply chain

This paper explores channel coordination and profit division in a socially responsible manufacturer-retailer chain through sub-game perfect equilibrium and extended alternative offer bargaining. The channel members jointly intend to swell stakeholder's welfare by exhibiting corporate social responsibility (CSR) in a proportion. It is found that (i) the channel's non-profit maximizing motive through CSR practice generates higher profit margin than would the profit maximizing objective, (ii) the manufacturer's wholesale price is below its marginal cost or negative above some thresholds of CSR and CSR sharing fraction, (iii) the CSR and CSR sharing fractions are key determining factors for the pure profits of the channel members because variations in choosing these two factors can lead to increment or decrement, even negative pure profits. On the other hand, for the CSR manufacturer, the wholesale price is less than the marginal cost for CSR practice above a threshold and is negative for heavy CSR practice though always larger than the marginal cost for the CSR retailer. So, the manufacturer's pure profit may be negative. Moreover, a channel member always prefers the other's CSR practice. Thus, in cooperative environment, equitable share of CSR may be a compromise solution.

A two-price policy for a newsvendor product supply chain with time and price sensitive demand

In technology-related industries, such as smartphones manufacturing, two phenomena can be observed for the products: the first is the obsolescence of an existing product, usually due to the appearance of a new product which decreases the attractiveness of the existing one; the second is the stochastic nature of the market demand and its price sensitivity. These two imply that the demand decreases over a product's lifecycle, and thus, the manufacturer and/or retailer may need to decline the retail price of the product during its lifecycle. In this paper, we assume that a dominant manufacturer wholesales a technological product to a retailer who has single or two buying opportunities. For either single- or two-buying-opportunity setting, we consider two models: (1) the retailer decreases the retail price at the product's midlife with no compensation from the manufacturer; (2) the manufacturer provides a rebate to the retailer for the retail price decline at the midlife. For the two-buying-opportunity setting, the rebate is that the manufacturer decreases the wholesale price at the midlife. The variables include the manufacturer's wholesale price and rebate, the retailer's order quantities and retail prices. We also compare the performance of the proposed models to the wholesale-price-only and the buyback policies.

Simultaneous settings of order quantity, wholesale price, production run length, process mean, and warranty period

In this article, the authors propose a modified version of S.L. Chen and Liu's model with a two-stage production system. Assume that the retailer's order quantity is concerned with the manufacturer's selling price and the warranty period of product. The used cost of the customer is measured under the Taguchi's quadratic quality loss function and concluded in the retailer's profit function. The quality of the lot for the manufacturer is determined by adopting a two-stage single sampling rectifying inspection plan. The modified economic manufacturing quantity (EMQ) model is addressed in formulating the manufacturer's expected profit. The retailer's order quantity, manufacturer's wholesale price, production run length, process mean, and warranty period of product will be jointly determined by maximizing the total expected profit of the supply chain system including the manufacturer and the retailer. Finally, the quality investment policy is introduced to illustrate the profit improvement for the supply chain system.

Revenue Sharing Contract of Green Supply Chain under Manufacturer Risk-Aversion

Background on two stages green supply chain consisting of a manufacturer and a retailer, considering the degree of risk aversion and product greenness, consumer preferences and other factors, the centralized decision-making game model and manufacturer-leading Stackelberg game model are established.Then two game models are compared. The interaction of product greenness, wholesale price, product price,and risk aversion utility for manufacturers and retailers are also disscussed. Finally, the revenue sharing contract is applied to coordinate the green supply chain . The results show that:(1) In the centralized decision-making model, there is a critical value of the product green degree; (2)In manufacturer-leading Stackelberg game model, the higher the green degree of the product, the higher the manufacturer's wholesale price,and the wholesale price increases as risk aversion degree of manufacturers improves;(3)The revenue sharing contract can coordinate this type of green supply chain under manufacturers risk-averse.

Pricing decisions and strategies selection of dominant manufacturer in dual-channel supply chain

This paper investigates the dominance strategies exerted by the dominant manufacturer for maintaining its dominant position in the channel system which is operating substitutable products and what influences they have on members of the whole channel system and the consumers. As to the channel system with two manufacturers and one retailer, the pricing decisions are depicted to compare the optimal choices made by the system members under the dominant manufacturer's wholesale price dominance strategy and channel dominance strategy, respectively. It shows that only the dominant manufacturer can necessarily benefit from the wholesale price dominance strategy. Furthermore, both dominant manufacturer and retailer can benefit from the channel dominance strategy, and consumers can also benefit from it. The channel dominance strategy, however, is not always the optimal choice for the dominant manufacturer. Whatever dominance strategy is it, the weak manufacturer will suffer loss, but in the channel dominance strategy, the market share proportion of the weak manufacturer will increase under certain circumstances.

The impact of customer returns on decisions in a newsvendor problem with and without buyback policies

In this paper, we examine how customer returns influence the retailer's ordering decision, the manufacturer's wholesale price decision, and the profits of the manufacturer and the retailer, in a single-period, stochastic demand (newsvendor) setting. When the manufacturer is a Stackelberg leader and the retailer is the follower, we also examine how to contract a buyback policy, where the manufacturer buys back both unsold inventory and customer-returned products, so that both the manufacturer and the retailer are more profitable than if they operate independently. We also show how this work can be generalized to the case of multiple retailers.

Optimal Contract Design for Mixed Channels Under Information Asymmetry

The mixed‐channel model is becoming increasingly popular in the marketplace. In this model, a firm selling through the traditional supply chain of wholesaler and retailer opens a direct channel to the customer through Internet sales. Because both channels have their respective advantages, the manufacturer is attracted to this business model. However, it also leads to channel conflict, with the retailer feeling threatened by direct competition. One way of eliminating the possibility of this channel conflict, where the retailer is allowed to add value to the product to differentiate its offering to the customers, is proposed in this paper. The retailer is also given full authority to make pricing decisions. This paper presents a model, under this scenario, of obtaining optimum pricing decisions by both parties, the amount of value added by the retailer, and the manufacturer's wholesale price to the retailer. Our model incorporates information asymmetry, where the manufacturer has incomplete information about the retailer's cost of adding value. We obtain closed‐form contracts with incomplete information and compare them with those with complete channel coordination. We also develop a number of managerial guidelines and identify future research topics.

Impacts of demand uncertainty on retailer's dominance and manufacturer-retailer supply chain cooperation

Recent studies in marketing and distribution channels have shown that the balance of power between manufacturers and retailers is shifting. Based on this observation, we investigate a two-echelon supply chain with a manufacturer and a retailer in this paper. We first develop retailer-dominant non-cooperative game models by introducing a sensitivity of retailer's order quantity to manufacturer's wholesale price; then we analyze two cooperative scenarios, in which the Nash bargaining model is utilized to implement profit sharing between the manufacturer and the retailer. Under the assumption that the manufacturer and the retailer are risk-neutral, we find that the manufacturer and the retailer can bargain to cooperate at any level of retail-market demand uncertainty with exogenous retail price. However, the cooperation is conditional on retail-market demand uncertainty with endogenous retail price: it can be implemented if the fluctuation of retail-market demand is relatively small, and the measure of retail-market demand uncertainty does not exceed an upper bound. Theoretical and numerical analyses show that the retailer's dominance over the manufacturer increases with the increase in the sensitivity of retailer's order quantity to manufacturer's wholesale price under a limitation of retail-market demand uncertainty. Numerical analyses also show that the retailer's dominance decreases with the increase in retail-market demand uncertainty.

Confidentiality and Information Sharing in Supply Chain Coordination

This paper is concerned with confidentiality of vertical information sharing in a supply chain consisting of one manufacturer in the upstream and two or more retailers in the downstream engaging in a Bertrand competition. Each retailer has some private information about the uncertain demand and may choose to disclose it to the manufacturer with or with out a confidentiality agreement. We consider three information scenarios with varying degrees of confidentiality and show that a higher degree of confidentiality makes the manufacturer worse off, the retailers better off, and the whole supply chain better off. Furthermore, although retailers have no incentive to publicly disclose their information, both retailers and the manufacturer will have incentives to sign agreements and engage in confidential information sharing when the retailer competition is sufficiently intense. When information is shared confidentially, the retailers will infer the shared information from the manufacturer's wholesale price, and this signaling effect makes the manufacturer's demand more price elastic and results in a lower equilibrium wholesale price. When all retailers share their information confidentially, the manufacturer's price coordinates the supply chain in the sense that the equilibrium outcome of the supply chain is Pareto optimal. We also show that confidentiality of information sharing does not affect the inventory cost if the manufacturer has an option of making to stock. Furthermore, a higher intensity of retailer competition increases the variability of demand in the upstream market while information sharing reduces it.

Vertical Pricing and Parallel Imports

We generalize an earlier model of international vertical pricing to explain key features of parallel imports, or unauthorized trade in legitimate goods. When a manufacturer (or trademark owner) sells its product through an independent agent in one country, the agent may find it profitable to engage in parallel trade, selling the product to another country without the authorization of the manufacturer. Although parallel imports can be deterred when the manufacturer's wholesale price is sufficiently high, there is a trade-off between improving vertical pricing efficiency and reducing parallel imports. In equilibrium, parallel imports can come from a country with higher retail prices, which is consistent with some factual data. While countries have varying interests in such a policy, restricting parallel imports tends to increase global welfare when trade cost is high, but may reduce welfare when trade cost is low. This finding suggests that open parallel trading regimes may be most appropriate within regional trade agreements.

Coordination of joint pricing-production decisions in a supply chain

We consider the coordination of dynamic, joint pricing-production/ordering decisions in a decentralized supply chain where a manufacturer outsources her product distribution/retailing function to an independent distributor/retailer. The manufacturer produces and wholesales her product to the distributor who, after some further processing, sells the product to an external market. In a leader-follower setting with convex production/ordering cost functions, both parties make pricing and production/ordering decisions over a discrete, finite-time horizon (a selling season) to maximize their respective profits. For a given manufacturer's (the leader's) wholesale price schedule, we develop a simple forward algorithm to solve the distributor's problem optimally, and prove a planning horizon property of the solution. Our key result is to show the existence of a manufacturer's price schedule that induces distributor to adopt decisions in the decentralized setting to achieve the performance of a centralized supply chain. Based on this channel-optimal pricing policy we then develop an incentive scheme for the manufacturer to achieve channel coordination. A numerical example is provided to compare the performance of different policies and lo reinforce key managerial insights generated through analysis.