Vertical Competition of Retailers vs. Cooperation Strategies in Fuzzy Environment for Pricing and Cooperative Advertising in a three-layer Supply Chain

The determination of the selling strategy, which includes pricing and advertising, is one of the most significant challenges in the management of a three-layer supply chain. This is done in order to strike a balance between market share and retail price, and as a result, to obtain the highest possible net profit percentage. In order to strike a balance between the demand for the product and the unit profit, one of the most important things to do is to determine the price of the commodity. On the other hand, advertising is one of the factors that has a significant impact on the process of attaining a larger market share and boosting the demand from customers. The purpose of this research is to determine the optimal advertising expenditure and wholesale pricing in a two-stage supply chain that consists of one producer and two retailers. This is done in a fuzzy environment so that the highest amount of profit may be obtained. It is assumed that certain of the characteristics, such as the market base, the demand sensitivity on the advertising, and the selling cost, are fuzzy variables. It is presumed that consumer demand is influenced by the amount of money that merchants spend on advertising. There are two distinct game models that have been suggested for the purpose of analyzing the issue: the Nash model and the Manufacturer-Leader Stackelberg Bertrand model. In the next section, several instances, analysis, and management insights are provided in order to provide a more clear representation of the issue.

Keywords:

Supply chain management , Pricing , Fuzzy variables , Game theory , Cooperative Advertising