Cooperative Advertising and Pricing in a Dynamic Stochastic Supply Chain: Feedback Stackelberg Strategies

• 成果类型: Article
• 署名作者: He, Xiuli; Prasad, Ashutosh; Sethi, Suresh P.
• 署名单位: University of North Carolina; University of North Carolina Charlotte; University of Texas System; University of Texas Dallas
• 刊物名称: PRODUCTION AND OPERATIONS MANAGEMENT
• ISSN/ISSBN: 1059-1478
• DOI: 10.1111/j.1937-5956.2009.01006.x
• 发表日期: 2009
• 页码: 78-94
• 关键词: co-op advertising; sales-advertising dynamics; differential games; Sethi model; distribution channel

摘要

Cooperative (co-op) advertising is an important instrument for aligning manufacturer and retailer decisions in supply chains. In this, the manufacturer announces a co-op advertising policy, i.e., a participation rate that specifies the percentage of the retailer's advertising expenditure that it will provide. In addition, it also announces the wholesale price. In response, the retailer chooses its optimal advertising and pricing policies. We model this supply chain problem as a stochastic Stackelberg differential game whose dynamics follows Sethi's stochastic sales-advertising model. We obtain the condition when offering co-op advertising is optimal for the manufacturer. We provide in feedback form the optimal advertising and pricing policies for the manufacturer and the retailer. We contrast the results with the advertising and price decisions of the vertically integrated channel, and suggest a method for coordinating the channel.