Coordination and competition in a duopoly with two-manufacturers and two-retailers under demand uncertainty

This paper studies the effect of competition for two coordinating supply chains. Each supply chain has one manufacture and two common retailers. There is competition at both manufacturer and retailer levels. The two manufacturers produce two substitutable products with differentiate brands. Thus, they compete on brand and sell their particular products by the two common retailers which compete on ordering and pricing policies. We obtain the optimal pair of pricing and ordering policies for the supply chain and all of four individual members. Then using the concepts of cooperative game theory for coordination analysis we show that achieving coordination under wholesale-price contract provide non-profitable manufacturers. Thus, the manufacturers should establish a Stackelberg-game with partial channel efficiency.

Keywords:

Supply chain coordination , Competition , Wholesale-price contract , Pricing , Demand uncertainty