Operations Research Transactions ›› 2021, Vol. 25 ›› Issue (2): 67-80.doi: 10.15960/j.cnki.issn.1007-6093.2021.02.005

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Research on price difference compensation mechanism of supply chain based on optimal concession equilibrium coordination strategy

Min JIANG1, Zhiqing MENG1,*(), Rui SHEN2   

  1. 1. School of Management, Zhejiang University of Technology, Hangzhou 320023, China
    2. School of Economics, Zhejiang University of Technology, Hangzhou 320023, China
  • Received:2020-03-23 Online:2021-06-15 Published:2021-05-06
  • Contact: Zhiqing MENG E-mail:mengzhiqing@zjut.edu.cn

Abstract:

In the supply chain, suppliers provide retailers with a compensation mechanism after the price of products is reduced, so as to encourage retailers to order more products. Therefore, we establish a price difference compensation mechanism model between manufacturer and retailer about a two stage sales. Firstly, we analyze results of the Nash equilibrium strategy and Stackelberg equilibrium strategy under the manufacturer to the retailer's price difference compensation mechanism of decision-making behavior. And then we obtain quantitative relationship of the price difference compensation mechanism under the optimal compromise equilibrium strategies. An algorithm of the approximate optimal compromise equilibrium strategy is proposed at a given price difference compensation coefficient. The case study of intelligent products shows that the mechanism of price difference compensation can improve the expected revenue of supply chain and increase the order quantity of retailers. It shows that the mechanism of price difference compensation can effectively improve relationships between suppliers and retailers.

Key words: supply chain contract, optimal concession equilibrium strategy, price difference compensation mechanism, intelligent product, game model

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