Supplier’s cooperation strategy with two competing manufacturers under wholesale price discount contract considering technology investment

Abstract

Cooperation between upstream suppliers and downstream manufacturers in technology investment is a popular way to improve production technology for reducing suppliers' production costs of key components. Technology investments undertaken by manufacturers and wholesale price discount contract provided by suppliers have an important impact on their cooperation. This paper explores whether a supplier should cooperate with two downstream competing manufacturers to accept their technology investments to reduce the supplier's production cost of a key component. Specifically, we consider the following three cooperation strategies: the supplier does not accept manufacturers' technology investments, only accepts one manufacturer's technology investment and accepts both manufacturers' technology investments. Our results demonstrate that the wholesale price discount contract and the technology investment can enhance the profits of the supplier and two manufacturers when the discount degree is low. Further, we conclude that when the discount degree is relatively low or when the discount degree and the technology investment efficiency are relatively high, the supplier's optimal cooperation strategy with two manufacturers is to accept both manufacturers' technology invest-

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“…Sarkar et al (2020b) suggested a price discount coordination mechanism in a two-level supply chain with price sensitive customer demand to encourage the supply chain players to take part in joint decision-making strategy. Yang et al (2021) explored the optimal cooperation strategy between an upstream supplier and two competing manufacturers considering a wholesale price contract and manufacturers' technology investment. In order to reduce products' carbon emissions.…”

Exploring Data Integrity of Dual-Channel Supply Chain Using Blockchain Technology

“…On the contrary, when the supplier reduces the online sales price of the product, the sales volume of the supplier's online sales channel will be increased, and the wholesale price determined by the supplier will be reduced. To attract consumers, the retailer will also reduce the online and offline sales price of the product [ 5 , 30 , 31 ]. Therefore, the price discount contract will not cause the situation that there is only single-channel demand in the supply chain system.…”