Co-op Advertising in a Two-Stage Supply Chain Considering Fuzzy Environment and Different Power Structures

One of the most important problems in a supply chain management is to determine the selling strategy including pricing and advertising in order to tradeoff between market share and retail price and consequently achieve maximum net profit. Therefore, determining price of commodity is one of the most critical items to balance between demand and unit profit. On the other hand, advertising is one of the crucially affecting items on increasing customer demand and gaining more market share. In this study, finding the optimum advertising expense and wholesale price in a two-stage supply chain with one manufacturer and two retailers is taking into consideration in fuzzy environment in order to receiving the maximum profit. Some of parameters including market base, demand sensitivity on the advertising as well as selling cost are assumed to be fuzzy variable. The customer demand is assumed to be affected by advertising cost of retailers. Two different game models are proposed to study the problem: Nash and Manufacturer-Leader Stackelberg Bertrand models. After that, some examples, analysis and managerial insights are given to better illustration of the problem.

Keywords:

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