The Stability Analysis of Manufacturer-Stackelberg Process in Two-Echelon Supply-Chain

AbstractIn the two-echelon supply-chain literature, the manufacturer-Stackelberg process, i.e. the manufacturer is a Stackelberg leader and the retailer is a Stackelberg follower, is one of the most common gaming assumptions. In which, the optimal prices and optimal profits of the manufacturer and the retailer should be affected by the shape of the demand curve. In this paper, we discuss the influence to the optimal prices and profits by changing the parameters in demand curve, and analyze the stability of the optimal prices and profits of the manufacturer and the retailer. By using the Lipschitz properties of the optimal price-functions and profit-functions on the parameters of the demand curve, we find that there are sizable distinction in the stability of the optimal prices and profits of the manufacturer and the retailer with different demand curves