Game-theoretic analysis of supply chain coordination under advertising and price dependent demand

Supply chain members cannot act independently and they need to act as a part of a unified system and coordinated with other members. Therefore, a coordination mechanism may be necessary to motivate members to achieve coordination. In this paper, the coordination problem is studied in a two-level sup...

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Main Authors: Mona Taheri, Seyyede Rozita Ebrahimi, Farid Khoshalhan
Format: Article
Language:English
Published: Growing Science 2014-06-01
Series:International Journal of Industrial Engineering Computations
Subjects:
Online Access:http://www.growingscience.com/ijiec/Vol5/IJIEC_2014_12.pdf
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spelling doaj-c38b4e32bbb149bdaa9cd448ac53208c2020-11-24T20:57:12ZengGrowing ScienceInternational Journal of Industrial Engineering Computations1923-29261923-29342014-06-015339540610.5267/j.ijiec.2014.4.003Game-theoretic analysis of supply chain coordination under advertising and price dependent demandMona TaheriSeyyede Rozita EbrahimiFarid KhoshalhanSupply chain members cannot act independently and they need to act as a part of a unified system and coordinated with other members. Therefore, a coordination mechanism may be necessary to motivate members to achieve coordination. In this paper, the coordination problem is studied in a two-level supply chain consisting of a supplier and a retailer where demand is a function of price and advertising expenditures in two scenarios. The first scenario is “No coordination”, and the other scenario is “coordination with Revenue sharing contract”. The models are solved using game theory, Cooperative and Nash equilibrium. Finally, numerical examples are presented indicating that the average expected profit in the second scenario, coordination with revenue sharing, is higher than the first scenario. In addition numerical examples indicate that as price and advertising elasticity to demand increase, profitability of supply chain decreases.http://www.growingscience.com/ijiec/Vol5/IJIEC_2014_12.pdfDecentralized supply chainSupply chain coordinationRevenue sharing contractGame theory
collection DOAJ
language English
format Article
sources DOAJ
author Mona Taheri
Seyyede Rozita Ebrahimi
Farid Khoshalhan
spellingShingle Mona Taheri
Seyyede Rozita Ebrahimi
Farid Khoshalhan
Game-theoretic analysis of supply chain coordination under advertising and price dependent demand
International Journal of Industrial Engineering Computations
Decentralized supply chain
Supply chain coordination
Revenue sharing contract
Game theory
author_facet Mona Taheri
Seyyede Rozita Ebrahimi
Farid Khoshalhan
author_sort Mona Taheri
title Game-theoretic analysis of supply chain coordination under advertising and price dependent demand
title_short Game-theoretic analysis of supply chain coordination under advertising and price dependent demand
title_full Game-theoretic analysis of supply chain coordination under advertising and price dependent demand
title_fullStr Game-theoretic analysis of supply chain coordination under advertising and price dependent demand
title_full_unstemmed Game-theoretic analysis of supply chain coordination under advertising and price dependent demand
title_sort game-theoretic analysis of supply chain coordination under advertising and price dependent demand
publisher Growing Science
series International Journal of Industrial Engineering Computations
issn 1923-2926
1923-2934
publishDate 2014-06-01
description Supply chain members cannot act independently and they need to act as a part of a unified system and coordinated with other members. Therefore, a coordination mechanism may be necessary to motivate members to achieve coordination. In this paper, the coordination problem is studied in a two-level supply chain consisting of a supplier and a retailer where demand is a function of price and advertising expenditures in two scenarios. The first scenario is “No coordination”, and the other scenario is “coordination with Revenue sharing contract”. The models are solved using game theory, Cooperative and Nash equilibrium. Finally, numerical examples are presented indicating that the average expected profit in the second scenario, coordination with revenue sharing, is higher than the first scenario. In addition numerical examples indicate that as price and advertising elasticity to demand increase, profitability of supply chain decreases.
topic Decentralized supply chain
Supply chain coordination
Revenue sharing contract
Game theory
url http://www.growingscience.com/ijiec/Vol5/IJIEC_2014_12.pdf
work_keys_str_mv AT monataheri gametheoreticanalysisofsupplychaincoordinationunderadvertisingandpricedependentdemand
AT seyyederozitaebrahimi gametheoreticanalysisofsupplychaincoordinationunderadvertisingandpricedependentdemand
AT faridkhoshalhan gametheoreticanalysisofsupplychaincoordinationunderadvertisingandpricedependentdemand
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