Optimal Advertising and Pricing in a Dynamic Durable Goods Supply Chain

Cooperative advertising is an incentive offered by a manufacturer to influence retailers’ promotional decisions. We study a dynamic durable goods duopoly with a manufacturer and two independent and competing retailers. The manufacturer, as a Stackelberg leader, announces his wholesale prices and his shares of retailers’ advertising costs, and the retailers in response play a Nash differential game in choosing their optimal retail prices and advertising efforts over time. We obtain the feedback equilibrium policies for the manufacturer and the retailers in explicit form for a linear demand formulation. We investigate issues, like channel coordination and antidiscriminatory legislation, and also study a case, when the manufacturer sells through only one retailer and the second retailer sells a competing brand.     

Risk sharing and information revelation mechanism of a one-manufacturer and one-retailer supply chain facing an integrated competitor

This paper develops an information revelation mechanism model of a one-manufacturer and one-retailer supply chain facing an outside integrated-competitor under demand uncertainty. We investigate how the manufacturer designs a wholesale price-order quantity contract to induce the retailer to report his risk sensitivity information truthfully. We try to explore the effects of the outside competitor and the risk-sharing rule on the optimal price-service level decisions of the retailer and the optimal wholesale prices of the manufacturer. We find that the strategic interaction plays an important role in the effect of risk sensitivity on the order quantity for the retailer. When the fraction of the risk cost shared by the manufacturer is sufficiently large (small), the optimal wholesale price for the high risk-averse retailer is higher (lower) than that for the low risk-averse retailer.     

Supply chain coordination through integration of innovation effort and advertising support

This study integrates firms’ innovation and advertising decisions in a two-echelon supply chain, where a monopoly manufacturer sells products to ultimate consumers through an autonomous retailer. Considering that both innovation and advertising contribute to the product demand, we first investigate the optimal equilibriums of channel members under two different game structures: the non-cooperative and cooperative. In the non-cooperative structure, the manufacturer controls the innovation effort and wholesale price while the retailer controls the advertising rate and retail pricing. In the cooperative structure, the manufacturer agrees to share part of retailer’s advertising expenditure. We find that both the optimal operation and marketing decisions are sensitive to effects of innovation and advertising on demand as well as the manufacturer’s cost reduction coefficient due to innovation. Further, we find that the manufacturer always prefers cooperation. Meanwhile, only when the firms’ investments significantly contribute to the market mechanism, does the retailer have incentive to implement a cooperative program. In addition, we further propose a new two-way subsidy policy to coordinate channel members’ business functions.     

Pricing/inventory decisions and profit shares in a non-integrated marketing channel for a single-period product

We consider the situation in which the manufacturer of a single-period product first sets the unit wholesale price and then the retailer responds with an order size. We present mostly analytical results on the effects of the problem's environmental parameters (such as shortage cost and demand uncertainty) on the optimal decisions (ie, the unit wholesale price and retailer's order size) and on the expected profits of the manufacturer and of the retailer. Some of these effects are counter-intuitive and/or contradict related results published recently for similar models. The most important finding is that demand uncertainty is always harmful to the manufacturer but is very often beneficial to the retailer. This means that when the manufacturer can set the wholesale price, the manufacturer should be much more supportive (or even aggressive) than previously advised towards activities such as market surveys and ‘Quick Response’ that reduce the retailer's market uncertainty; in contrast, the retailer need not be as enthusiastic about these activities.     

A game theoretic approach to coordinate pricing and vertical co-op advertising in manufacturer-retailer supply chains

Vertical cooperative (co-op) advertising is a marketing strategy in which the retailer runs local advertising and the manufacturer pays for a portion of its entire costs. This paper considers vertical co-op advertising along with pricing decisions in a supply chain; this consists of one manufacturer and one retailer where demand is influenced by both price and advertisement. Four game-theoretic models are established in order to study the effect of supply chain power balance on the optimal decisions of supply chain members. Comparisons and insights are developed. These embrace three non-cooperative games including Nash, Stackelberg-manufacturer and Stackelberg-retailer, and one cooperative game. In the latter case, both the manufacturer and the retailer reach the highest profit level; subsequently, the feasibility of bargaining game is discussed in a bid to determine a scheme to share the extra joint profit.     

货架展示量与定价模型及供应链协调分析

针对单生产商和单零售商组成的供应链,假定需求依赖于货架展示量与零售价格,分别建立了集中式控制下和分散式控制下的货架展示量与定价决策模型,给出了协调供应链的批发价加货架补贴合同。针对单生产商和n个零售商组成的供应链,假定总需求是n个零售商的总货架展示量和平均零售价格的函数、每个零售商的需求与其货架展示相关的促销努力成正比,分析了相应的集中式与分散式决策,并给出了协调供应链的批发价加货架补贴加转移支付合同。     

Coordination of cooperative advertising in a two-level supply chain when manufacturer offers discount

We studied the coordination of cooperative advertisement in a manufacturer–retailer supply chain when the manufacturer offers price deductions to customers. With a price sensitive market, the expected demand with cooperative advertising and price deduction is demonstrated. When the manufacturer is a leader, we obtained the optimal national brand name investment, local advertisement and associated manufacturer’s allowance with any given price deduction. When the manufacturer offers more price deduction to customers, the retailer will increase local advertisement if the manufacturer provides the same portion of the local advertising allowance. We obtained the necessary and sufficient condition for the price deduction to ensure an increase of manufacturer’s profit, and a search procedure for determining such an optimal price deduction is provided as well. When the manufacturer and retailer are partners, we obtained the optimal national brand name investment and local advertisement. For any given price deduction, the total profit for the supply chain with cooperative scheme is always higher than that with the non-cooperative scheme. When price elasticity of demand is larger than one, the resulting closed form optimal price deduction with partnership is also obtained. To increase profits for both parties in a supply chain, we recommend that coordination in local and national cooperative advertising with a partnership relationship between manufacturer and retailer is the best solution. The bargaining results show how to share the profit gain between the manufacturer and the retailer, and determine the associated pricing and advertising policies for both parties.     

Two-period pricing and decision strategies in a two-echelon supply chain under price-dependent demand

This paper presents a two-period supply chain model which is comprised of one manufacturer and one retailer who are involved in trading a single product. The demand rate in each period is dependent on the selling prices of the current period and the previous period. We assume that the manufacturer acts as the Stackelberg leader and declares wholesale price(s) to the retailer who follows the manufacturer’s decision and sets his selling prices for two consecutive periods. The manufacturer adopts one of the two pricing options: (1) setting the same wholesale price to both the selling periods (2) setting different wholesale prices to two different selling periods. Based on these pricing options, we develop four decision strategies of the manufacturer and the retailer and compare them. For a numerical example, we study the effects of these decision strategies on the optimal results of the supply chain. Further, we graphically analyze under what circumstances a particular decision strategy plays a dominant role.     

The impact of sharing customer returns information in a supply chain with and without a buyback policy

In this paper, we examine a single period problem in a supply chain in which a Stackelberg manufacturer supplies a product to a retailer who faces customer returns and demand uncertainty. We show that the manufacturer incurs a significant profit loss with and without a buyback policy if it fails to account for customer returns in the wholesale price decision. Under the assumption that the retailer is better informed than the manufacturer on customer returns information, we show that without a buyback policy, the retailer prefers not to share if the manufacturer overestimates while it prefers to share customer returns information if the manufacturer underestimates this information. If the manufacturer offers a buyback policy, we have the opposite results. We also discuss incentives to share the customer returns information and some of the issues that are raised in sharing this information.     

A note on the classification of consumer demand functions with respect to retailer pass-through rates

Tyagi (1999) derived conditions on the curvature of consumer demand functions which make it optimal for a profit-maximizing retailer to pass-through greater (less) than 100% of a manufacturer trade deal amount. Since the pass-through is customarily evaluated at the optimal wholesale price, then additional sufficient conditions are needed to ensure the existence of an optimal wholesale price. The purpose of this note is to derive the additional required conditions on the curvature of the consumer demand functions for the existence of a greater (less) than 100% retailer pass-through rate at the optimal wholesale price.     

供应链互补产品广告投入和捆绑销售联合决策研究

以一个制造商和一个零售商的供应链为研究对象,制造商生产两种互补产品,零售商可选择分开或捆绑两种销售策略。考虑互补品的负交叉弹性和广告外部性的特点,构建基于溢出效应的需求模型,运用博弈论的方法,求解零售商采取分开和捆绑两种销售策略时的均衡结果。通过比较不同销售策略下的均衡结果及利润关系,探讨在分散式和集中式两种情况下,零售商的最优广告投入和捆绑销售的联合决策问题。最后,通过数值算例,讨论产品互补程度和广告成本系数对决策结果的影响。研究结果表明,无论是在分散式还是集中式决策下,当产品互补程度较高或广告成本系数低时,分开销售是占优策略而广告费用较高;当产品互补程度较低且广告成本系数高时,捆绑销售是占优策略且广告费用较低。     

具有公平偏好成员的两阶段供应链分析

本论文分析具有公平偏好零售商与制造商组成的供应链,在制造商作为Stackelberg博弈的领导者提供批发价格合同给零售商时,零售商如何确定最优的订货量而制造商如何确定最优的批发价格.当需求满足均匀分布时,研究发现存在均衡的最优订货量以及最优批发价格.本论文也分析了需求分布参数对均衡最优解的影响.最后,通过数值计算对供应链的绩效如何随公平偏好参数变化的问题进行了研究.并且说明公平偏好是零售商获取其对供应链利润分配的一种手段.     

考虑成员风险态度的零售商资金约束闭环供应链定价与回收决策

针对由制造商、回收商和资金约束的零售商组成的三级闭环供应链,考虑供应链成员面对市场需求不确定时表现出不同的风险态度,研究了闭环供应链的定价与回收决策问题。首先给出了产品的市场需求函数与回收商的回收成本函数;然后基于均值-方差法,构建了各成员和闭环供应链的效用函数;进一步地,依据博弈论的思想,确定了不同渠道权力结构下的最优零售价格、最优回收率和最优批发价格;最后分析了闭环供应链成员风险态度和贷款利率对供应链最优决策和效用的影响。研究表明,成员风险态度和贷款利率能够影响闭环供应链最优决策和效用,其中,风险规避的零售商和制造商对闭环供应链其他成员均有利,但是对自身和闭环供应链不利;风险规避的回收商对闭环供应链成员均不利;贷款利率的增长会降低成员和闭环供应链的效用。     

两周期零售商竞争下的闭环供应链的定价和协调策略研究

研究了两生命周期零售商竞争环境下的闭环供应链的定价和生产策略:第一个生命周期中,只有一个制造商和一个零售商,制造商利用原材料生产新制造产品;第二个周期中,制造商生产新制造产品的同时利用自己回收的废旧产品生产再制造产品,并且出现了竞争零售商。分别建立了两周期零售商竞争环境下的分散决策模型和集中决策模型,得到了最优定价和生产策略。结果表明:零售商竞争会降低产品的零售价,增加产品的销售量。制造商利用收益共享契约制定合适的批发价和收益共享比率能协调整个闭环供应链,与零售商实现共赢。最后给出了一个算例验证了上述结论。     

强制减排规制下基于碳减排利润增量分享契约的供应链协调研究

碳减排会增加制造商的成本,导致批发价和零售价提高,从而抑制市场需求。以此为背景,本文针对由一个制造商和一个零售商组成的供应链,研究了强制减排规制下考虑消费者低碳偏好时的供应链决策与协调。通过设计碳减排利润增量分享契约协调制造商和零售商的决策,实现帕累托改进,利用Rubinstein讨价还价模型最终确定减排利润分享比例。研究发现,实施碳减排利润分享契约能有效提高零售商的订货量,并降低批发价格;制造商的利润随着消费者低碳意识提高而提高;当净化率较低时,零售商的利润随消费者低碳意识提高而提高;当净化率较高时,零售商的利润随消费者低碳意识提高而降低;最后,论文通过数值模拟验证了碳减排利润分享契约的有效性。     

Demand disruption and coordination of the supply chain with a dominant retailer

This paper develops two coordination models of a supply chain consisting of one manufacturer, one dominant retailer and multiple fringe retailers to investigate how to coordinate the supply chain after demand disruption. We consider two coordination schedules, linear quantity discount schedule and Groves wholesale price schedule. We find that, under the linear quantity discount schedule, the manufacturer only needs to adjust the maximum variable wholesale price after demand disruption. For each case of the disrupted amount of demand, the higher the market share of the dominant retailer, the lower its average wholesale price and the subsidy will be under the linear quantity discount schedule, while the higher its fraction of the supply chain’s profit will be under Groves wholesale price schedule. When the increased amount of demand is very large and production cost is sufficiently low, linear quantity discount schedule is better for the manufacturer. However, when the production cost is sufficiently large, Groves wholesale price schedule is always better. We also find that the disrupted amount of demand largely affects the allocation of the supply chain’s profit.     

Consumer returns reduction and information revelation mechanism for a supply chain

In this paper, we develop two revelation mechanism models of a supply chain consisting of one manufacturer and one retailer under asymmetric information, where the retailer provides store assistance (SA) to reduce consumer returns rate and increase demand. Under full information, we find that a higher returns rate or returns handling cost increases the SA level if the market scale is sufficiently high. In the demand information asymmetry model, we find that: (i) the low-type retailer (facing a low demand) has no incentive to distort demand information while the high-type retailer may report wrong information; (ii) the manufacturer would like to design a menu of wholesale price-order quantity contract to induce truthful demand information and the manufacturer pays an information rent to the high-type retailer if the returns rate or returns handling cost for the retailer is sufficiently low; (iii) asymmetry of information does not change the monotonicity of the unit wholesale price in the retailer’s type, and information asymmetry decreases the retail price but increases the SA level. Unlike the demand information asymmetry model, a higher retailer’s returns handling cost expands the effects of information asymmetry on the retail price and the SA level, and using revelation mechanism decreases the channel profit if the retailer’s returns handling cost is sufficiently high under the returns rate information asymmetry model.     

Product variety, pricing and differentiation in a supply chain

Manufacturers typically sell consumer products through retailers and the presence of intermediaries has interesting ramifications for their product variety and pricing decisions. Retailers may want higher variety to help reduce price competition but the costs of variety are borne by the manufacturer. The increased variety may increase demand and profits for the manufacturer too but this depends on market-specific factors as well as costs. We explore these interactions through a model wherein a manufacturer sells multiple product variants at a wholesale price to two retailers who in turn compete for consumers. Consumers choose between the retailers based on the price and variety offered by each retailer and the search or transportation cost incurred by the consumer, equivalent to the level of retailer differentiation in our model. Several insights emerge from the analysis. The manufacturer offers the same variety to both retailers and this variety increases with market size and consumer sensitivity to variety. We find that some retailer differentiation benefits the retailers (not the manufacturer) but too much differentiation hurts both the retailers and the manufacturer. If the market is fully covered, then the channel is coordinated even with a simple wholesale pricing contract. If the retailers incur costs to sell the product, the manufacturer surprisingly loses out more than the retailers and in fact absorbs some or all of the retailer costs. Finally, asymmetry between retailers has some unexpected consequences. For example, variety is not impacted by asymmetry in consumer preferences for a retailer and the manufacturer offers the same variety to both retailers.     

A dynamic model for advertising and pricing competition between national and store brands

We study the relationship between the pricing and advertising decisions in a channel where a national brand is competing with a private label. We consider a differential game that incorporates the carryover effects of brand advertising over time for both the manufacturer and the retailer and we account for the complementary and competitive roles of advertising. Analysis of the obtained equilibrium Markov strategies shows that the relationship between advertising and pricing decisions in the channel depends mainly on the nature of the advertising effects. In particular, the manufacturer reacts to higher competitive retailer’s advertising levels by offering price concessions and limiting his advertising expenditures. The retailer’s optimal reaction to competitive advertising effects in the channel depends on two factors: (1) the price competition level between the store and the national brands and (2) the strength of the competitive advertising effects. For example, in case of intense price competition between the two brands combined with a strong manufacturer’s competitive advertising effect, the retailer should lower both the store and the national brands’ prices as a reaction to higher manufacturer’s advertising levels. For the retailer, the main advantage from boosting his competitive advertising investments seems to be driven by increased revenues from the private label. The retailer should however limit his investments in advertising if the latter generates considerable competitive effects on the national brand’s sales.     

政府规制下不同市场力量主导的CLSC决策

为了研究不同市场力量主导下电器电子产品闭环供应链(CLSC)决策的差异以及政府规制对决策的影响,在政府规制和无政府规制下建立由制造商、销售商和消费者构成的闭环供应链模型,并分别在制造商和销售商主导市场的情形下,基于博弈方法求得政府最优规制工具、CLSC各成员的最优经营策略和利润以及社会福利。结果表明:无论政府规制与否,不同市场力量主导不会影响销售价、再生利用率和政府规制工具的制定,也不会影响社会福利,但会影响批发价和回收价决策以及各成员的利润,并且当制造商主导市场时批发价更高,销售商主导市场时回收价更高。制造商和销售商通常都在自己主导市场时利润最大。此外,无论市场主导力量是制造商还是销售商,政府规制都将提高批发价和销售价,且当再生利用率指标不高于制造商的最优再生利用率时,政府规制一般都有助于提高回收价以及各成员的利润。