Supply Chain Coordination under Price Competition

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Author(s): S.P. Sarmah (Indian Institute of Technology, India)and Santanu Sinha (Indian Institute of Technology, India)
Copyright: 2011
Pages: 23
Source title: Electronic Supply Network Coordination in Intelligent and Dynamic Environments: Modeling and Implementation
Source Author(s)/Editor(s): Iraj Mahdavi (Mazandaran University of Science and Technology, Iran), Shima Mohebbi (University of Tehran, Iran)and Namjae Cho (Hanyang University, Korea)
DOI: 10.4018/978-1-60566-808-6.ch010

Keywords: Business & Management / Business Information Systems / Business Intelligence / Business Science Reference

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Abstract

This chapter analyzes the coordination and competition issues in a two-stage supply-chain in which a vendor distributes a product to two different retailers who compete on their retail prices in the same market. The demand faced by each retailer not only depends on its own price, but also on the price set by the other retailer. Mathematical models have been developed to analyze the coordination mechanism. It is shown here that perfect channel coordination can be achieved by employing simultaneously quantity discounts, volume discounts and franchise fees. Further, it has been shown that under non-cooperative price competition, the steady state equilibrium is dynamically stable in nature under certain conditions. The model is illustrated with suitable numerical examples.

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