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Competition and Coordination in a Fashion Supply Chain with Wholesale Pricing Schemes

Competition and Coordination in a Fashion Supply Chain with Wholesale Pricing Schemes

Jian Huang, Mingming Leng, Liping Liang
Copyright: © 2012 |Pages: 32
ISBN13: 9781609607562|ISBN10: 1609607562|EISBN13: 9781609607579
DOI: 10.4018/978-1-60960-756-2.ch003
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MLA

Huang, Jian, et al. "Competition and Coordination in a Fashion Supply Chain with Wholesale Pricing Schemes." Fashion Supply Chain Management: Industry and Business Analysis, edited by Tsan-Ming Choi, IGI Global, 2012, pp. 42-73. https://doi.org/10.4018/978-1-60960-756-2.ch003

APA

Huang, J., Leng, M., & Liang, L. (2012). Competition and Coordination in a Fashion Supply Chain with Wholesale Pricing Schemes. In T. Choi (Ed.), Fashion Supply Chain Management: Industry and Business Analysis (pp. 42-73). IGI Global. https://doi.org/10.4018/978-1-60960-756-2.ch003

Chicago

Huang, Jian, Mingming Leng, and Liping Liang. "Competition and Coordination in a Fashion Supply Chain with Wholesale Pricing Schemes." In Fashion Supply Chain Management: Industry and Business Analysis, edited by Tsan-Ming Choi, 42-73. Hershey, PA: IGI Global, 2012. https://doi.org/10.4018/978-1-60960-756-2.ch003

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Abstract

This chapter considers a two-echelon supply chain where a supplier determines his production quantity and a retailer chooses her order size and retail price for each period in an infinite horizon. Under a price-discount sharing (PDS) scheme, the supplier’s wholesale price linearly depends on the retail price. We develop a stochastic game in which these two supply chain members maximize their discounted profits. We show that a unique Nash equilibrium solution exists for each period, and over the infinite horizon the supplier chooses a stationary base stock policy whereas the retailer’s equilibrium solution could be non-stationary. Next, we investigate the problem of whether or not a wholesale pricing scheme can coordinate the supplier and the retailer, and derive the conditions for supply chain coordination. Moreover, we use Nash arbitration scheme to allocate the system-wide profit between the supplier and the retailer.

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