A stackelberg differential game theoretic approach for analyzing coordination strategies in a supply chain with retailer’s premium store brand

The present study examines a supply chain consisting of a manufacturer and a retailer. The manufacturer produces a product with a national brand (NB) and the retailer selling both the NB product and his own premium store brand (PSB) product. The manufacturer competes with the retailer through improv...

Full description

Saved in:
Bibliographic Details
Published in:Annals of operations research 2024-05, Vol.336 (3), p.1519-1549
Main Authors: Assarzadegan, Parisa, Hejazi, Seyed Reza, Rasti-Barzoki, Morteza
Format: Article
Language:English
Subjects:
Advertising
Brand loyalty
Business and Management
Combinatorics
Competition
Coordination
Customers
Decision making
Differential games
Game theory
Innovations
Operations Research/Decision Theory
Original Research
Product development
Quality management
Revenue sharing
Supply chain management
Supply chains
Theory of Computation
Citations: Items that this one cites
Items that cite this one
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:The present study examines a supply chain consisting of a manufacturer and a retailer. The manufacturer produces a product with a national brand (NB) and the retailer selling both the NB product and his own premium store brand (PSB) product. The manufacturer competes with the retailer through improving the quality by using innovation over time. It is assumed that both advertising and enhanced quality play positive roles in customers’ loyalty over time for the NB product. We propose four scenarios, including: (1) Decentralized (D), (2) Centralized (C), (3) Coordination with a revenue-sharing contract (RSH), and (4) Coordination with a two-part tariff contract (TPT). A Stackelberg differential game model is developed, and parametric analyses and managerial insights are provided based on a numerical example. Our results show that: (1) Introducing a PSB product alongside selling the NB product is profitable for the retailer, (2) In Scenario D and RSH, the manufacturer tries to increase the quality gap with the PSB product through innovation, (3) Customers’ loyalty leads to higher prices, levels of innovation, quality, and advertising for the NB product, (4) The TPT contract can lead to perfect coordination and yield higher profits for the manufacturer and the retailer.
ISSN:0254-5330
1572-9338
DOI:10.1007/s10479-023-05372-9