Volume 55, Number 2, March-April 2021
|Page(s)||701 - 725|
|Published online||16 April 2021|
Managing strategies of product quality and price based on trust under different power structures
Zhejiang Informatization Development Institute, Hangzhou Dianzi University, Hangzhou 310018, P.R. China
2 School of Electronic Information and Electrical Engineering, Shanghai Jiao Tong University, Shanghai 200240, P.R. China
3 School of International and Public Affairs, Institute of Health Yangtze River Delta, China Institute for Urban Governance, Shanghai Jiao Tong University, Shanghai 200030, P.R. China
* Corresponding author: firstname.lastname@example.org
Accepted: 28 February 2021
This paper investigates the quality and pricing decisions in a supply chain consists of one retailer and two manufacturers. The retailer updates the trust value to manufacturers based on the historical information of product quality to determine the actual order quantity. We propose four game models by considering two situations, i.e., manufacturer-dominant scenario and retailer-dominant scenario. Based on theoretical and numerical analysis, we obtain a series of valuable management insights. For example, when a manufacturer with unreliable product quality is the leader and competes with another reliable manufacturer, the retailer’s profit would eventually surpass that of two stronger manufacturers. When the retailer is the leader, the retailer’s profit is often greater when two manufacturers engage in the Stackelberg game rather than that in Bertrand game, and the manufacturer with unreliable product quality can make profit no less than that of another manufacturer with reliable quality.
Mathematics Subject Classification: 90B06
Key words: Supply chain management / trust / dynamic update / game theory / simulation
© EDP Sciences, ROADEF, SMAI 2021
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