Pricing and Retail-Servicing Decisions Under a Supply Chain Including One Manufacturer and one Retailer Applying Game Theory

In this study, pricing and retail-servicing decisions are investigated on a dual-channel supply chain including one manufacturer and one retailer. For this reason, the game-theoretic approach is used to make the decisions under both the competitive and cooperative situations in the considered supply chain. Under the competitive situation, the players maximize their profits independently, while under the cooperative situation, the manufacturer and retailer cooperate to maximize the profit of the whole system. A numerical example is presented to illustrate the obtained results. Then, the analysis obtained from the investigated models will be presented. The results indicate that the retailer’s profit increases by increasing the price in the e-tail channel as well as by decreasing the price set by the manufacturer to the retailer. Under the competitive situation, the retail price increases as the retail services increase. The change of the retail price with respect to the retail services is greater than the change of the etail price. Under the cooperative situation, the retail price of the product increases by increasing the retail services. In addition, the change of the retail price with respect to the retail services is higher than the change of the etail price. Finally, a sensitivity analysis is performed on the considered parameters to determine the effect of the change of the parameters on the players’ profits