Modelling pricing, vertical co-op advertising and quality improvement in a non-cooperative three-echelon supply chain using game theory approach
RAIRO - Operations Research - Recherche Opérationnelle, Tome 53 (2019) no. 5, pp. 1937-1965.

Vertical cooperative (co-op) advertising is one of the well-known mechanisms for coordination of supply chains. Vertical co-op advertising is a financial agreement in which a member of the chain pays certain percentage (i.e. cooperation rate) of a subsequent member’s advertisement cost. Since increasing the number of echelons and decision variables in supply chain problems increase the modelling and computational complexity, most researchers study vertical co-op advertising in a two-level supply chain including a manufacturer and a retailer. This paper investigates the problem by considering price and quality levels as additional decision variables in a three-echelon supply chain consisting of one supplier, one manufacturer, and one retailer. The ultimate goal is to show supply chain managers the importance of product quality as well the role of local advertisement in positively influencing market demand on top of the traditional approach of speed and efficiency optimization. Using game theory approach, power of the manufacturer is assumed to be higher than or equal to those of others in the chain. Five different relationships between players are considered in five non-cooperative games (named as G1–G5) and equilibrium solutions are extracted for each. The results show that the manufacturer prefers to play Stackelberg with the retailer and the supplier rather than be in conflict with them in Nash game. Such preference can lead manufacturer towards high quality and cost-efficient product/service via efficient advertisement in our complex network of business firms.

Reçu le :
Accepté le :
DOI : 10.1051/ro/2018109
Classification : 91A10
Mots-clés : Supply chain management, pricing theory, vertical cooperative advertising, quality improvement, game theory
Shoeleh, Razieh 1 ; Seifbarghy, Mehdi 1 ; Pishva, Davar 1

1 
@article{RO_2019__53_5_1937_0,
     author = {Shoeleh, Razieh and Seifbarghy, Mehdi and Pishva, Davar},
     title = {Modelling pricing, vertical co-op advertising and quality improvement in a non-cooperative three-echelon supply chain using game theory approach},
     journal = {RAIRO - Operations Research - Recherche Op\'erationnelle},
     pages = {1937--1965},
     publisher = {EDP-Sciences},
     volume = {53},
     number = {5},
     year = {2019},
     doi = {10.1051/ro/2018109},
     mrnumber = {4031689},
     zbl = {1431.90010},
     language = {en},
     url = {http://archive.numdam.org/articles/10.1051/ro/2018109/}
}
TY  - JOUR
AU  - Shoeleh, Razieh
AU  - Seifbarghy, Mehdi
AU  - Pishva, Davar
TI  - Modelling pricing, vertical co-op advertising and quality improvement in a non-cooperative three-echelon supply chain using game theory approach
JO  - RAIRO - Operations Research - Recherche Opérationnelle
PY  - 2019
SP  - 1937
EP  - 1965
VL  - 53
IS  - 5
PB  - EDP-Sciences
UR  - http://archive.numdam.org/articles/10.1051/ro/2018109/
DO  - 10.1051/ro/2018109
LA  - en
ID  - RO_2019__53_5_1937_0
ER  - 
%0 Journal Article
%A Shoeleh, Razieh
%A Seifbarghy, Mehdi
%A Pishva, Davar
%T Modelling pricing, vertical co-op advertising and quality improvement in a non-cooperative three-echelon supply chain using game theory approach
%J RAIRO - Operations Research - Recherche Opérationnelle
%D 2019
%P 1937-1965
%V 53
%N 5
%I EDP-Sciences
%U http://archive.numdam.org/articles/10.1051/ro/2018109/
%R 10.1051/ro/2018109
%G en
%F RO_2019__53_5_1937_0
Shoeleh, Razieh; Seifbarghy, Mehdi; Pishva, Davar. Modelling pricing, vertical co-op advertising and quality improvement in a non-cooperative three-echelon supply chain using game theory approach. RAIRO - Operations Research - Recherche Opérationnelle, Tome 53 (2019) no. 5, pp. 1937-1965. doi : 10.1051/ro/2018109. http://archive.numdam.org/articles/10.1051/ro/2018109/

M. Bergen and G. John, Understanding cooperative advertising participation rates in conventional channels. J. Marketing Res. 34 (1997) 357–369. | DOI

J. Yue, J. Austin, Z. Huang and B. Chen, Pricing and advertisement in a manufacturer–retailer supply chain. Eur. J. Oper. Res. 231 (2013) 492–502. | DOI | MR | Zbl

P.D. Berger, Vertical cooperative advertising ventures. J. Marketing Res. 9 (1972) 309–312. | DOI

G. Aust and U. Buscher, Cooperative advertising models in supply chain management: a review. Eur. J. Oper. Res. 234 (2014) 1–14. | DOI | MR | Zbl

Z. Huang and S.X. Li, Co-op advertising models in manufacturer and retailer supply chains: a game theory approach. Eur. J. Oper. Res. 135 (2001) 527–544. | DOI | MR | Zbl

Z. Huang, S.X. Li and V. Mahajan, An analysis of manufacturer–retailer supply chain coordination in cooperative advertising. Decis. Sci. 33 (2002) 469–494. | DOI

A. Quilliot, F. Bendali and J. Mailfert, Cooperative networks games with elastic demands. RAIRO: OR 41 (2007) 345–360. | DOI | Numdam | MR | Zbl

M.M. Seyedesfahani, M. Biazaran and M. Gharakhani, A game theoretic approach to coordinate pricing and vertical co-op advertising in manufacturer–retailer supply chains. Eur. J. Oper. Res. 211 (2011) 263–273. | DOI | MR | Zbl

J. Xie and J.C. Wei, Coordinating advertising and pricing in a manufacturer–retailer channel. Eur. J. Oper. Res. 197 (2009) 785–791. | DOI | MR | Zbl

J. Xie and A. Neyret, Co-op advertising and pricing models in manufacturer–retailer supply chains. Comput. Ind. Eng. 56 (2009) 1375–1385. | DOI

G. Aust and U. Buscher, Vertical cooperative advertising and pricing decisions in a manufacturer–retailer supply chain: a game-theoretic approach. Eur. J. Oper. Res. 223 (2012) 473–482. | DOI | MR | Zbl

J. Naoum-Sawaya and S. Elhedhli, Controlled predatory pricing in a multiperiod Stackelberg game: an MPEC approach. J. Global Optim. 50 (2011) 345–362. | DOI | MR | Zbl

E. Marchi and P. Andrea Cohen, Cooperative advertising: a biform game analysis. IMA Preprint Series #2261, University of Minnesota, Minneapolis, MN (2009).

S. Ghadimi, F. Szidarovszky, R. Zanjirani Farahani and A. Yousefzadeh Khiabani, Coordination of advertising in supply chain management with cooperating manufacturer and retailers. IMA J. Manage. Math. 24 (2013) 1–19. | MR | Zbl

S. Karray, Periodicity of pricing and marketing efforts in a distribution channel. Eur. J. Oper. Res. 228 (2013) 635–647. | DOI | MR | Zbl

J. Ang, M. Fukushima, F. Meng, T. Noda and J. Sun, Establishing Nash equilibrium of the manufacturer–supplier game in supply chain management. J. Global Optim. 65 (2013) 563–573. | MR | Zbl

L. Zhao, J. Zhang and J. Xie, Impact of demand price elasticity on advantages of cooperative advertising in a two-tier supply chain. Int. J. Prod. Res. 54 (2016) 2541–2551. | DOI

J.G. Szmerekovsky and J. Zhang, Pricing and two-tier advertising with one manufacturer and one retailer. Eur. J. Oper. Res. 192 (2009) 904–917. | DOI | MR | Zbl

J. Chaeb and M. Rasti-Barzoki, Cooperative advertising and pricing in a manufacturer–retailer supply chain with a general demand function: a game-theoretic approach. Comput. Ind. Eng. 99 (2016) 112–123. | DOI

S.D. Wang, Y.W. Zhou, J. Min and Y.G. Zhong, Coordination of cooperative advertising models in a one-manufacturer two-retailer supply chain system. Comput. Ind. Eng. 61 (2011) 1053–1071. | DOI

J. Zhang and J. Xie, A game theoretical study of cooperative advertising with multiple retailers in a distribution channel. J. Syst. Sci. Syst. Eng. 21 (2012) 37–55. | DOI

G. Aust and U. Buscher, Vertical cooperative advertising in a retailer duopoly. Comput. Ind. Eng. 72 (2014) 247–254. | DOI

B.C. Giri and S. Sharma, Manufacturer’s pricing strategy in a two-level supply chain with competing retailers and advertising cost dependent demand. Econ. Model. 38 (2014) 102–111. | DOI

S. Karray and S. Hassanzadeh Amin, Cooperative advertising in a supply chain with retail competition. Int. J. Prod. Res. 53 (2015) 88–105. | DOI

S. Jørgensen and G. Zaccour, A survey of game-theoretic models of cooperative advertising. Eur. J. Oper. Res. 237 (2014) 1–14. | DOI | MR | Zbl

G. Aust, Vertical Cooperative Advertising in Supply Chain Management: A Game-Theoretic Analysis. Springer, Germany, 2014. | MR

R.D. Banker, I. Khosla and K.K. Sinha, Quality and competition. Manage. Sci. 44 (1998) 1179–1192. | DOI | Zbl

G. Xie, S. Wang and K.K. Lai, Quality improvement in competing supply chains. Int. J. Prod. Econ. 134 (2011) 262–270. | DOI

J.T. Hong and J.F. Chen, Game theory analysis of quality control in two-echelon supply chain. J. Shanghai Jiaotong Univ. (Sci.) 18 (2013) 508–512. | DOI

G. Aust, Pricing, product quality, and retail service in a three-echelon supply chain. Lecture Notes Manage. Sci. 6 (2014) 119–127.

G. Xie, W. Yue and S. Wang, Quality improvement policies in a supply chain with Stackelberg games. J. Appl. Math. 2014 (2014) 1–9. | DOI | MR | Zbl

Y. Zheng, T. Shu and S. Wang, Analysis of product return rate and price competition in two supply chains. Oper. Res. Int. J. 18 (2018) 469–496. | DOI

H. Jafari, S.R. Hejazi and M. Rasti-Barzoki, Pricing decisions in dual-channel supply chain with one manufacturer and multiple retailers: A game-theoretic approach. RAIRO: OR 51 (2017) 1269–1287. | DOI | Numdam | MR | Zbl

P. Liu and S.-P. Yi, Pricing policies of green supply chain considering targeted advertising and product green degree in the Big Data environment. J. Cleaner Prod. 164 (2017) 1614–1622. | DOI

A.A. Taleizadeh, M.S. Moshtagh and I. Moon, Pricing, product quality, and collection optimization in a decentralized closed-loop supply chain with different channel structures: Game theoretical approach. J. Cleaner Prod. 189 (2018) 406–431. | DOI

J. Huang, M. Leng and M. Parlar, Demand functions in decision modeling: a comprehensive survey and research directions. Decis. Sci. 44 (2013) 557–609. | DOI

Cité par Sources :