Design of Bi-Level Programming Model for a Decentralized Production-Distribution Supply Chain with Cooperative Advertising

In this paper, we investigate a decentralized manufacturer-distributer supply chain. In addition to global advertisement, the manufacturer participates in the local advertising expenditures of distributer. Bi-level programming approach is applied to model the relationship between the manufacturer and retailer under two power scenarios of stackelberg game framework and the optimal policies in pricing, advertising, inventory management and logistics are identified. Two hierarchical genetic algorithms are proposed to solve the bi-level programming models. Based on collected data from Iranian automotive spare parts aftermarket, several numerical experiments are carried out to evaluate the validity of proposed models as well as the efficiency and effectiveness of solution procedures.