Title: Pricing and order coordination of two-echelon supply chain under duopolistic retailer's competition

Authors: Lin Li, Jia-Zhen Huo

Addresses: School of Economics & Management, Tongji University, Shanghai 200092, PR China. ' School of Economics & Management, Tongji University, Shanghai 200092, PR China

Abstract: This paper examines the pricing and order coordination decisions in a two-echelon supply chain with one manufacturer who supplies a single product to duopolistic retailers, whose demands interact with the assumption of being price-sensitive. The problem is analysed under the Stackelberg structure, in which the manufacturer acting as a leader declares her wholesale price and a Common-Replenishment-Epochs (CRE) schedule to competitive retailers, and the duopolistic retailers acting as followers respond with their sales prices and associated order policies. By theoretical analysis and numerical example, we find that CRE strategy not only induce lower retail price and higher total demand, but also change the market sharing among duopolistic retailers. The effects of change of several parameters on the optimal decisions are also analysed.

Keywords: two-echelon supply chains; duopolistic retailers; CRE policy; Stackelberg game; pricing decisions; ordering decisions; supply chain management; SCM; common-replenishment-epochs schedule; retail prices; total demand; market sharing.

DOI: 10.1504/IJSOI.2009.029181

International Journal of Services Operations and Informatics, 2009 Vol.4 No.4, pp.295 - 316

Published online: 09 Nov 2009 *

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