A cooperative and non-cooperative game theory approach in manufacturer-retailer supply chain

Abstract

In this paper, numerous manufacturer-retailer supply chain models are anticipated which incorporate equally cost factors as well as elements of competition and cooperation between manufacturer and retailer. We assume that unit marketing expenditure and unit price charged by the retailer manipulate the demand of the product being sold. The dealings between manufacturer and retailer will be modeled by non-cooperative and cooperative games, correspondingly. The non-cooperative game is based on the Stackelberg strategy solution perception, where we reflect on separately the case when the manufacturer is the principal (Manufacturer-Stackelberg) and as well when the retailer is the principal (Retailer -Stackelberg). Pareto efficient solutions will be provided for the cooperative game model.