An optimal dicisional model in two-echelon supply chain

AbstractThis paper studies inventory and pricing policies in a non-cooperative supply chain with one supplier and several retailers who are involved in producing, delivering and selling a single product. We consider inventory policies in an information-asymmetric vendor managed inventory. The study brings up a scenario where a supplier produces the product at thewholesale price to multiple retailers. The retailers also distribute the product in dispersed and independent markets at retail selling prices. The demand rate for each market is a non-decreasing concave function of the marketing expenditures of both local retailers and the manufacturer, but a non-increasing and convex function of the retail selling prices. The primary purpose is to determine wholesale price, marketing expenditure for supplier and retailers, replenishment cycles for the product, and backorder quantity to maximize the total profit for both groups of supplier and retailers. The scenario is modeled as a Stackelberg game where the manufacturer is the leader and the retailers are the followers