Journal Article

A Stackelberg Game for Retailer-Led Supply Chains Considering the Selling Effort in a Fuzzy Environment

Meng, Lei, Hong, Mei-Xiang

2020

Overview

As it is difficult to describe economic activities with certainty, uncertain and ambiguous theories are often used to describe corporate behavior. This study uses fuzzy set theory to examine the optimal decision of each member of a two-stage supply chain, which includes a manufacturer and a retailer. In this supply chain, the retailer takes the leading position and makes sales efforts. By considering the market demand function, the manufacturer's manufacturing cost and the retailer's operating cost as fuzzy variables, and by employing sequential game, expected value, and opportunity constraint models, the optimal decision-making solutions are resolved. Finally, a numerical example demonstrates the effectiveness of the supply chain game model. In the equilibrium result, considering the cost of the sales effort undertaken by the retailer, their overall expected profit is lower than that of the manufacturer. However, the product unit has a higher marginal profit. The reason for this result is that the dominance of the retailers not only increases product sales through their sales efforts and increases the revenue of all members of the supply chain, but it also enables them to lower their wholesale prices and make themselves more profitable in the supply chain.

• Publisher: International Association of Engineers
• Subject: Constraint modelling / Decision making / Decision theory / Fuzzy logic / Fuzzy set theory / Fuzzy sets / Game theory / Manufacturers / Operating costs / Production costs / Profits / Sales / Supply chains