SURVEY OF STACKELBERG AND CENTRALIZED APPROACHES IN DYNAMIC ADVERTISING AND PRICING FOR DUAL CHANNEL SUPPLY CHAIN

In last two decades, with increasing access to the Internet, like the social networks and other web-based medias, costumer's distributors and producers show are interested to have closer relations with each other. In this paper, we examined dynamic advertising and pricing equilibrium strategies of a dual channel supply chain members, based on Stackelberg and centralized game models through differential game theory approach. Because analyzing interactions among a set of members in a supply chain could better described by tools of game theory. supply chain members can compete or cooperate with each other to promote and optimize their payoffs. Supply chain consists of a Manufacturer and one retailer. Manufacturer provides the product for the final consumer by two traditional and online channels. By a closer look, online channel, manufacturer tries to sell products to the final consumers as a retailer without intermediators such as retailers or distributors. The retailer's local advertising has a positive and direct effect on its sales. This leads them to compete between manufacturer and retailer at the retail level. Both of them, attempt to gain more profits and effects on the competitor's profit in the retail level through both online and traditional channels by controlling sale prices in order to obtain the optimal pricing strategies in the presented differential game of. Behavior of the advertising decision, selling price and profits of each member in the chain were modeled in these scenarios and analyzed using a numerical example. In addition, the total profit of supply chain in each of scenarios was compared. According to the results of Numerical analysis, in Stackelberg scenario, advertising effort, price and Profit of manufacturer in online channel are higher than advertising effort, price and profit of retailer in traditional channel, respectively. Conversely, in centralized scenario, advertising effort, price and profit of manufacturer in online channel is lower than the advertising effort, price and profit of Retailers in traditional channel, respectively.