Dissertation Title: Joint pricing and inventory model for substitutable products in dual supply chains (Game theory approach)
Abstract
This thesis focuses on modeling and solving a pricing and inventory problem considering substitutable products in a decentralized single-period supply chain with internet and traditional retailer sell channels. Channel and brand competition is considered for each product whose demand function is stochastic and linear depending on several parameters. First, first and second model study the pricing problem in a supply chain consisting of two manufacturers who sell their substitutable products through an independent retailer and one of them (in first model) or both of them (in second model) sell their substitutable products directly to consumers through their own Internet channels. Then, third model focuses on determining ordering and pricing policies in a single-period closed loop supply chain includes a number of manufacturers who provide their different but substitutable products for their customers via a common retailer; however the manufacturers can have their own internet-based sales channel in order to provide products for the customers. The customers can return products if they are not satisfied with. Customers were allowed to return the products received via the Internet-based sales channel to the original manufacturer before using them, while they could return the products after using them, as second-hand products, to the repair center. The return second-hand products are collected in a repair center, are repaired and sold as second-degree product through the retailer channel or through an internet-based sale channel. This study aims to determine the optimum prices for the internet-based and retailer sales channels for the initial and second-hand products. It also tries to determine the optimal values of retailer order and production rates of manufacturers and repair centers. Three decentralized pricing policy are developed and the corresponding analytical equilibrium solutions are obtained using the game-theoretic approach for Nash and Stackelberg games. Numerical examples are presented to study the effectiveness of each policy. The effect of important parameters on the profit, price and demand functions were investigated based on which very useful managerial analyses were presented. The results indicate that brand loyalty enhancement is profitable for both the manufacturers and the retailer. Furthermore, a limited increase in service value may decrease the threat of the direct Internet channel for the retailer while increasing the profit.
Keywords: Pricing, Inventory, Substitutable products, Multiple sale channels, Game theory, Closed loop supply chain.
