Presenting a Model for Coordination in Pricing and Cooperation in a Supply Chain with Discount Using Game Theory

Supply chain's optimal performance needs to obtain a part of the activities, but these activities have not always been favored chain members and in fact each of the involved members in the chain decides independently to increase their profits and not necessarily profit chain and this leads to poor performance of the entire chain. Coordinating is such an important issue that it is widely considered in the supply chain. Naturally, participatory or non-participatory games theory is one of the most prominent tools for analyzing this type of competition and cooperation issues in supply chain.This paper discusses to coordinate of two-level supply chain consisting of a manufacturer and a retailer with using cooperative advertising along with pricing decisions and Manufacturer offer prices discount to retailer where demand is influenced by both prices and advertising. Cooperative advertising is a concerted effort by channel members that occurs to increase customer demand. By using game theory we consider two models of the relationship between manufacturer and retailer which consists of noncooperative nash game and cooperative game and bargaining model is discussed to share the extra joint profit in cooperative game based on of players’ risk attitude and bargaining power.