A Responsive-Pricing Retailer Sourcing from Competing Suppliers Facing Disruptions

• 成果类型: Article
• 署名作者: Shan, Xi; Li, Tao; Sethi, Suresh P.
• 署名单位: Minnesota State Colleges & Universities; Bemidji State University; Santa Clara University; University of Texas System; University of Texas Dallas
• 刊物名称: M&SOM-MANUFACTURING & SERVICE OPERATIONS MANAGEMENT
• ISSN/ISSBN: 1523-4614
• DOI: 10.1287/msom.2020.0934
• 发表日期: 2022
• 页码: 196-213
• 关键词: Stackelberg-Nash game; disruption; responsive pricing; competing suppliers

摘要

Problem definition: We study a problem of a retailer that orders from competing strategic suppliers subject to independent or correlated disruptions and responds by setting the retail price on delivery, called responsive pricing. The suppliers set their wholesale prices in a Nash game. Academic/practical relevance: Supplier disruption correlation exists for reasons such as product and service designs, geographic proximity, and common tier 2 suppliers. In practice, many retailers are able to set the product price after knowing the delivered quantity. Methodology: We model this problem as a Stackelberg-Nash game with the suppliers as the leaders and the retailer as the follower and obtain its equilibrium explicitly. We perform sensitivity analyses with respect to suppliers' production costs, reliabilities, and their correlation. Results: We find, surprisingly, that an increase in the reliability of a supplier may, counter to our intuition, hurt it because of the competition between the suppliers selling to a responsive-pricing retailer. Furthermore, in contrast to the literature, we find that under responsive pricing, a high disruption correlation may benefit a supplier that has a cost advantage, and the total order quantity may increase in that correlation because of supplier competition. Managerial implications: This paper has important implications for unreliable suppliers because the way reliability and correlation influence their profits depends on the retailer's pricing power and the competition intensity between the suppliers. With a responsive-pricing retailer, a supplier may not benefit from higher reliability but may benefit from a higher correlation. This suggests that a low-cost supplier serving a responsive-pricing retailer could add to its decision-making tools a new incentive of creating a positively correlated supply network by building plants in the geographic location of its competitor or sourcing from the same tier 2 supplier to obtain an increased correlation strategically.