A numerical study on competing supply chains: a price-setting newsvendor model
by Chongqi Wu; Steve Peng; Bin Shao
International Journal of Applied Management Science (IJAMS), Vol. 9, No. 2, 2017

Abstract: Consider an industry with two competing two-echelon supply chains. Each supply chain consists of one manufacturer and one retailer. Each retailer is modelled as a price-setting newsvendor. That is, each retailer sets his inventory as well as retail price. In such a setting, we numerically study the impact of horizontal competition and demand uncertainty on wholesale and retail prices, inventories, manufacturer profit, retailer profit, and supply chain profit. Demand uncertainty is captured by an additive stochastic demand function in which the random shock is uniformly distributed. Three key findings are: 1) horizontal competition could be beneficial for both manufacturer and retailer; 2) it is possible for retailer to optimally keep less inventory when demand uncertainty increases, provided that horizontal competition is much intense; 3) inventory (and thus order quantity) is an effective tool for retailer to transfer much of demand risk to manufacturer.

Online publication date: Sun, 09-Jul-2017

The full text of this article is only available to individual subscribers or to users at subscribing institutions.

 
Existing subscribers:
Go to Inderscience Online Journals to access the Full Text of this article.

Pay per view:
If you are not a subscriber and you just want to read the full contents of this article, buy online access here.

Complimentary Subscribers, Editors or Members of the Editorial Board of the International Journal of Applied Management Science (IJAMS):
Login with your Inderscience username and password:

    Username:        Password:         

Forgotten your password?


Want to subscribe?
A subscription gives you complete access to all articles in the current issue, as well as to all articles in the previous three years (where applicable). See our Orders page to subscribe.

If you still need assistance, please email subs@inderscience.com