Manufacturer’s R&D Investment Strategy and Pricing Decisions in a Decentralized Supply Chain
Consider that a manufacturer Stackelberg supply chain consists of an upstream supplier and a downstream manufacturer. The manufacturer purchases a component from the supplier and then transforms it into a final product which is sold in a price and quality sensitive market. The manufacturer considers...
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| Main Authors: | , |
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| Format: | Article |
| Language: | English |
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Wiley
2017-01-01
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| Series: | Discrete Dynamics in Nature and Society |
| Online Access: | http://dx.doi.org/10.1155/2017/9879874 |
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| _version_ | 1832565250838233088 |
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| author | Hengyun Zhang Dingjun Hong |
| author_facet | Hengyun Zhang Dingjun Hong |
| author_sort | Hengyun Zhang |
| collection | DOAJ |
| description | Consider that a manufacturer Stackelberg supply chain consists of an upstream supplier and a downstream manufacturer. The manufacturer purchases a component from the supplier and then transforms it into a final product which is sold in a price and quality sensitive market. The manufacturer considers to make R&D investment to improve the product quality and reduce the production cost. We first investigate and derive the optimal investment strategy and pricing decisions by establishing a three-stage game model. We show that the optimal investment strategy and pricing decisions in the decentralized model may deviate from those in the centralized model. We then propose a mechanism to coordinate the decentralized supply chain, by introducing a profit sharing policy, a production cost sharing policy, and an investment cost sharing policy. Finally, we show that both the supplier and the manufacturer can benefit from participating in the proposed coordination mechanism. |
| format | Article |
| id | doaj-art-9c22e4ff64574444865781649f2c169e |
| institution | Kabale University |
| issn | 1026-0226 1607-887X |
| language | English |
| publishDate | 2017-01-01 |
| publisher | Wiley |
| record_format | Article |
| series | Discrete Dynamics in Nature and Society |
| spelling | doaj-art-9c22e4ff64574444865781649f2c169e2025-02-03T01:08:57ZengWileyDiscrete Dynamics in Nature and Society1026-02261607-887X2017-01-01201710.1155/2017/98798749879874Manufacturer’s R&D Investment Strategy and Pricing Decisions in a Decentralized Supply ChainHengyun Zhang0Dingjun Hong1School of Management and Economics, University of Electronic Science and Technology of China, Chengdu, ChinaSchool of Management and Economics, University of Electronic Science and Technology of China, Chengdu, ChinaConsider that a manufacturer Stackelberg supply chain consists of an upstream supplier and a downstream manufacturer. The manufacturer purchases a component from the supplier and then transforms it into a final product which is sold in a price and quality sensitive market. The manufacturer considers to make R&D investment to improve the product quality and reduce the production cost. We first investigate and derive the optimal investment strategy and pricing decisions by establishing a three-stage game model. We show that the optimal investment strategy and pricing decisions in the decentralized model may deviate from those in the centralized model. We then propose a mechanism to coordinate the decentralized supply chain, by introducing a profit sharing policy, a production cost sharing policy, and an investment cost sharing policy. Finally, we show that both the supplier and the manufacturer can benefit from participating in the proposed coordination mechanism.http://dx.doi.org/10.1155/2017/9879874 |
| spellingShingle | Hengyun Zhang Dingjun Hong Manufacturer’s R&D Investment Strategy and Pricing Decisions in a Decentralized Supply Chain Discrete Dynamics in Nature and Society |
| title | Manufacturer’s R&D Investment Strategy and Pricing Decisions in a Decentralized Supply Chain |
| title_full | Manufacturer’s R&D Investment Strategy and Pricing Decisions in a Decentralized Supply Chain |
| title_fullStr | Manufacturer’s R&D Investment Strategy and Pricing Decisions in a Decentralized Supply Chain |
| title_full_unstemmed | Manufacturer’s R&D Investment Strategy and Pricing Decisions in a Decentralized Supply Chain |
| title_short | Manufacturer’s R&D Investment Strategy and Pricing Decisions in a Decentralized Supply Chain |
| title_sort | manufacturer s r d investment strategy and pricing decisions in a decentralized supply chain |
| url | http://dx.doi.org/10.1155/2017/9879874 |
| work_keys_str_mv | AT hengyunzhang manufacturersrdinvestmentstrategyandpricingdecisionsinadecentralizedsupplychain AT dingjunhong manufacturersrdinvestmentstrategyandpricingdecisionsinadecentralizedsupplychain |