Introducing a model for competitiveness of suppliers in supply chain through game theory approach

Abstract: The purpose of the present study is to introduce a model for competitiveness of suppliers in supply chain through game theory approach in one of the automobile companies of Iran. In this study, the game is based on price and non-price factors and this company is going to estimate the real profit obtained from collaboration with each of supply chain members. This happens by considering the governing competitive condition based on game theory before entering a bit for purchase of ? piece as spare part among 8 companies supplying this piece as the supply chain members. According to experts in this industry, the quality is the main non-price competitiveness factor after price. In the current research models, the model introduced by Lu and Tsao (2011) [Lu, J.C., Tsao, Y.C., & Charoensiriwath, C. (2011). Competition Under manufacturer Service and retail price. Economic Modeling, 28,1256-1264.] with two manufacturers- one distributer, being appropriate for the research data, has been considered as the basis and implemented for case study and then it has been extended to n-manufacturers-one common retailer. Following price elasticity of demand, potential size of market or maximum product demand, retailer price, production price, wholesale price, demand amount, manufacturer and retailer profit are estimated under three scenario of manufacturer Stackelberg, Retailer Sackelberg and Vertical Nash. Therefore, by comparing them, price balance points and optimum level of services are specified and the better optimum scenario can be determined. Sensitivity analysis is performed for new model and manufacturers are ranked based on manufacture profit, Retailer profit and customer satisfaction. Finally, in this research in addition to introducing-person game model, customer satisfaction, which has been presented in the previous models as a missed circle are analyzed.

How to cite this paper

 Deljavan, H & Sadeghi, F. (2012). Introducing a model for competitiveness of suppliers in supply chain through game theory approach.Decision Science Letters , 1(2), 69-86.

Refrences

Boyaci , T., & Gallego, G. ( 2004) .Supply Chain Coordination in a Market With Customer Service Competition. Production and Operations Management, 13(1), 3-22.

Boyaci , T., & Ray, S.( 2003) .Product differentiation and capacity cost interaction in time and price sensitive markets. Manufacturing and Service Operations Management, 5(11), 18-36.

Choi, S. C. (1991). Price Competition in a Channel Structure with Common Retailer. Marketing Science, 10(4), 271-296.

Hall, J., & Porteus, E. (2000).Customer Service Competition in Capacitated Systems. Manufacturing & Service Operations Management, 2(2), 144-165.

Esmaeili , M., Aryanezhad, M.B., & Zeephongsekul, P. (2009). A game theory approach in seller–buyer supply chain. European Journal of Operational Research, 195 , 442–448.

Esmaeili, M., & Zeephongsekul, P. (2010). Seller buyer models of supply chain management with an asymmetric information structure. International Journal of Production Economics,123,146–154.

Lu, J.C., Tsao, Y.C., & Charoensiriwath, C. (2011). Competition Under manufacturer Service and retail price. Economic Modeling , 28,1256-1264.

Tsay, A., & Agrawal, N. (2000).Channel Dynamics under Price and Service Competition. Manufacturing & Service Operations Management, 2(4), 372-391.

Vilcassim, N. J., Kadiyali, V., & Chintagunta, P. K. (2000).Investigating Dynamic Multiform Market Interactions in Price and Advertising. Management Science, 45(4), 499-518.