This paper investigates the quality and pricing decisions in a supply chain consists of one retailer and two manufacturers. The retailer updates the trust value to manufacturers based on the historical information of product quality to determine the actual order quantity. We propose four game models by considering two situations, i.e., manufacturer-dominant scenario and retailer-dominant scenario. Based on theoretical and numerical analysis, we obtain a series of valuable management insights. For example, when a manufacturer with unreliable product quality is the leader and competes with another reliable manufacturer, the retailer’s profit would eventually surpass that of two stronger manufacturers. When the retailer is the leader, the retailer’s profit is often greater when two manufacturers engage in the Stackelberg game rather than that in Bertrand game, and the manufacturer with unreliable product quality can make profit no less than that of another manufacturer with reliable quality.
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DOI : 10.1051/ro/2021032
Keywords: Supply chain management, trust, dynamic update, game theory, simulation
@article{RO_2021__55_2_701_0,
author = {Fu, Xiao and Liu, Shuchun and Shen, Wendi and Han, Guanghua},
title = {Managing strategies of product quality and price based on trust under different power structures},
journal = {RAIRO. Operations Research},
pages = {701--725},
year = {2021},
publisher = {EDP-Sciences},
volume = {55},
number = {2},
doi = {10.1051/ro/2021032},
mrnumber = {4243968},
language = {en},
url = {https://www.numdam.org/articles/10.1051/ro/2021032/}
}
TY - JOUR AU - Fu, Xiao AU - Liu, Shuchun AU - Shen, Wendi AU - Han, Guanghua TI - Managing strategies of product quality and price based on trust under different power structures JO - RAIRO. Operations Research PY - 2021 SP - 701 EP - 725 VL - 55 IS - 2 PB - EDP-Sciences UR - https://www.numdam.org/articles/10.1051/ro/2021032/ DO - 10.1051/ro/2021032 LA - en ID - RO_2021__55_2_701_0 ER -
%0 Journal Article %A Fu, Xiao %A Liu, Shuchun %A Shen, Wendi %A Han, Guanghua %T Managing strategies of product quality and price based on trust under different power structures %J RAIRO. Operations Research %D 2021 %P 701-725 %V 55 %N 2 %I EDP-Sciences %U https://www.numdam.org/articles/10.1051/ro/2021032/ %R 10.1051/ro/2021032 %G en %F RO_2021__55_2_701_0
Fu, Xiao; Liu, Shuchun; Shen, Wendi; Han, Guanghua. Managing strategies of product quality and price based on trust under different power structures. RAIRO. Operations Research, Tome 55 (2021) no. 2, pp. 701-725. doi: 10.1051/ro/2021032
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