Competition between multi-level supply chains with hybrid distribution structures under two service systems

Abstract

Distribution management is an important part of the business cycle for distributors and wholesalers. It is also important for businesses to have successful distribution management systems in order to remain competitive and keep customers satisfied. In this research, we consider the competition between two multi-echelon supply chains under two different service systems where price and service level are considered as performance measures. For every supply chain, there are two different indirect channels for the sale of the products that have not been taken into account previously. Thus, each supply chain benefits from two rival sale channels with different structures. The different structures of these channels induce magnificent changes in the demand function. Hence, we develop two alternate scenarios which are based on the centralized and decentralized servicing conditions. In the centralized conditions, the manufacturer is authorized to service all the members of the chains. In the decentralized conditions, the sale channels are responsible for decision-making about service level for every member of the chains. Furthermore, the effects of competition and sensitivity analysis on the equilibrium of the scenarios and supply chain profit are discussed in a numerical example.