Negotiation-Sequence, Pricing, and Ordering Decisions in a Three-Echelon Supply Chain: A Coopetitive-Game

Feimin ZHONG, Zhongbao ZHOU, Mingming LENG*

*Corresponding author for this work

Research output: Journal PublicationsJournal Article (refereed)peer-review

Abstract

We investigate a three-echelon supply chain in which a distributor at the middle echelon negotiates two wholesale price contracts with his upstream manufacturer and downstream retailer. In the first stage, the distributor decides on whether to first negotiate with the manufacturer or with the retailer; in the second (combined, noncooperative-cooperative, game) stage, the two negotiations are conducted sequentially. We …nd that the supply chain can be coordinated if the distributor first negotiates with the retailer. The distributor should choose the negotiation sequence for supply chain coordination, if he has a sufficiently large (small) relative bargaining power in the negotiation with the manufacturer (the retailer). We also extend our analysis to the cases in which the distributor and the manufacturer negotiate a buyback or two-part tariff contract, and draw similar outcomes when the distributor first negotiates with the retailer. In addition, under the two-part tariff contract, the distributor prefers to first negotiate with the retailer if the manufacturer has a sufficiently high disagreement payoff whereas, under the buyback contract, the distributor always prefers to first negotiate with the firm with a stronger bargaining power. Moreover, the two-part tariff (buyback) contract cannot (can) always coordinate the supply chain.
Original languageEnglish
JournalEuropean Journal of Operational Research
Early online date11 Feb 2021
DOIs
Publication statusE-pub ahead of print - 11 Feb 2021

Bibliographical note

The first two authors (i.e., Feimin Zhong and Zhongbao Zhou) were supported by the National Natural Science Foundation of China (Nos. 71801086, 71771082) and the Natural Science Foundation of Hunan Province (Nos. 2019JJ50083, 2017JJ1012). The third author (Mingming Leng) was supported by the General Research Fund (GRF) of the Hong Kong Research Grants Council under Research Project No. LU13500020.

Keywords

  • Supply Chain management
  • negotiation sequence
  • pricing
  • coopetitive game
  • generalized Nash bargaining solution

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