Optimal Pricing Strategy of a Two-Echelon Supply Chain Consisting of One Manufacturer and Two Retailers with Price and Service Sensitive Demand

摘要

AbstractA supply chain model comprising of one manufacturer and two retailers have been discussed in the proposed model, where the manufacturer acts as leader. It has been assumed that both the retailers offer service facilities to the customers. The optimal pricing strategy of the members of the supply chain have been derived analytically in three situations, namely, Cournot situation, Collusion situation and Stackelberg situation. In Cournot situation, both the retailers set independently the unit selling prices on the wholesale price set by the manufacturer. In Collusion situation, both the retailers agree to set their unit selling prices which maximizes the total profit of the retailers. In case of Stackelberg situation, one of the two retailers acts as leader and the other retailer is the follower. It has been observed that in Collusion situation, the retailer-1 incurs highest profit, whereas, in Stackelberg situation, the retailer-2 achieves highest profit. In the Collusion situation, the retailer-2 can charge higher selling price, but due to more service expenses, the corresponding profit of the retailer-2 is lower than that of retailer-1. The model is solved analytically and the solution has been illustrated with the help of two numerical examples.]]>