Supply Chain Network Equilibrium Models With Stock-Dependent Demand

Abstract

There widely exist brand-to-brand competition and channel-to-channel competition in supply chain network. Retailer’s stock influences its demand, which is an important competition factor. For a supply chain network consisting of two manufacturers and two retailers with stock-dependent demand, this paper sets up three equilibrium models using the equilibrium theory such as the decentralized decision model when all agents make decisions to maximize their own profits, the brand-profit-maximum model when two dominant manufacturers make decisions to maximize the profits of their own brands, and the channel-profit-maximum model when two dominant retailers make decisions to maximize the profits of their channels. The order quantities and profits of two brands in the brand-profit-maximum model, and of two channels in the channel-profit-maximum model, are more than those in the decentralized decision model. So, two buy-back contracts are put forward to coordinate two decentralized retailers to choose the same decisions as in the brand-profit-maximum model and the channel-profit-maximum model respectively. A numerical example is taken to validate these models and contracts. It shows that supply chain coordination can promote the competitive ability of channel and brand.