An Analysis Upon Concepts and Approaches of Game Theory In Scm: Competitiveness Among Suppliers

Exploring Game Theory Applications in Supply Chain Management

Abstract

This research studies a case where there are twomanufacturers producing competing products and selling them through a commonretailer. The consumer demand depends on two factors: (1) retail price, and (2)service level provided by the manufacturer. Game-theoretic framework is appliedto obtained the equilibrium solutions for every entities. In this paper, we develop a game theoretic model forcooperative advertising in a supply chain consisting of a monopolisticmanufacturer selling its product to the consumer only through competingduopolistic retailers. We consider a new form of the demand function which isan additive form. The demand is influenced by both retail price and advertisingexpenditures. We develop a pricecompetition model for a new supply chain that competes in a market comprised ofsome rival supply chains. The new supply chain has one risk-neutralmanufacturer and one risk-averse retailer in which the manufacturer is a leaderand retailer is a follower.