Manufacturer’s pricing strategy for supply chain with warranty period-dependent demand

Strategic Direction

ISSN: 0258-0543

Article publication date: 14 September 2012

452

Keywords

Citation

Chen, X. (2012), "Manufacturer’s pricing strategy for supply chain with warranty period-dependent demand", Strategic Direction, Vol. 28 No. 10. https://doi.org/10.1108/sd.2012.05628jaa.006

Publisher

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Emerald Group Publishing Limited

Copyright © 2012, Emerald Group Publishing Limited


Manufacturer’s pricing strategy for supply chain with warranty period-dependent demand

Article Type: Abstracts From: Strategic Direction, Volume 28, Issue 10

Chen X., Li L. and Zhou M.Omega, December 2012, Vol. 40 No. 6, Start page: 807, No. of pages: 10

This article presents a review of the issues associated with a manufacturer’s pricing strategies in a two-echelon supply chain that comprises one manufacturer and two competing retailers, with warranty period-dependent demands. The manufacturer, as a Stackelberg leader, specifies wholesale prices to two competing retailers who face warranty period-dependent demand and have different sales costs. The manufacturer considers three pricing options: setting the same price for both retailers, while disregarding their difference with regard to sales cost; setting a different price to each retailer on the basis of their sales cost; and setting the same price to both retailers according to the average sales cost of the industry. In this article, the retailers’ optimal warranty periods and their optimal profit, manufacturer’s optimal wholesale price, and his/her optimal profit associated with different pricing strategies have been derived using the game theory. Our analysis shows that the results for retailers are the same with Strategy 1 or Strategy 3. In addition, we compared the effects of different pricing strategies of the manufacturer on supply chain decisions and profit. We conclude from the results that the manufacturer should either adopt Strategy 2 with symmetrical sales cost information or Strategy 3 if retailers’ sales costs are asymmetrical.Article type: Research paperISSN: 0305-0483Reference: 41AH604

Keywords: Game theory, Pricing, Supply chain management, Warranty period-dependent demand

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