Bi-level pricing and inventory strategies for perishable products in a competitive supply chain

Abstract

This paper aims to develop a new bi-level game model for joint pricing and inventory decisions in a competitive supply chain consisting of a dominant manufacturer, who produces single perishable product from deteriorating raw materials, and two follower retailers who face nonlinear price-dependent demand and operate under Cournot assumptions. Three levels of warehousing including raw material warehouse, final product warehouse, and retail warehouses with exponential deterioration rates are considered to explore the joint impact of deterioration rate and price elasticity on the equilibrium inventory decisions. A Stackelberg-Nash-Cournot model is developed to seek the equilibrium prices, quantities, and replenishment cycles and is solved through an exact methodology. A numerical example is presented to validate the proposed model and comprehensive sensitivity analyses are carried out to measure the impact of the model’s key parameters including the deterioration rate in the producer’s and the retailers’ warehouses, the retail and competitor price elasticity, and the market scale on the equilibrium.

The strategies of hub facility location and its utilization in managing the supply chain of perishable products for sustainability and uncertainty mitigation: A literature review

“…Jabarzadeh et al (2020) investigated an optimization problem for a closed-loop supply chain of perishable agricultural products, aiming to achieve sustainability goals such as reducing total network costs, carbon dioxide emissions, and enhancing demand responsiveness. Rajabi et al, (2021) devised a novel two-tier game model for pricing and inventory management in a competitive supply chain, involving a dominant producer of a single perishable product and two followers facing nonlinear pricing. Alemany et al (2020) examined optimization models, both centralized and distributed, for multi-farm product planning amid uncertainty, demonstrated through a case study of the fresh tomato supply chain in Argentina.…”

Multi-Oligopoly Sequential Pricing Mechanisms and Their Game Analysis in Raw Material Supply Chains

“…Dey et al [33] used the Stackelberg model to determine the best decision for a closed-loop supply chain consisting of a manufacturer, two suppliers, and two competing retailers. Rajabi et al [34] studied joint pricing and inventory in a competitive supply chain consisting of a dominant manufacturer and two follower retailers facing nonlinear, price-dependent demand operating under Gounod model decisions. Hubert et al [35] analyzed the role of blockchain adoption decisions and differentiated the pricing strategies of genuine manufacturers in combating counterfeit and counterfeit products based on a single-tier manufacturer framework.…”