Cooperative Advertising and Pricing in a Competitive Market with Customers’ Excitations Effects

Document Type: Research Paper

Authors

1 Faculty of Industrial Engineering, Campus of Engineering, University of Tehran, Tehran, Iran

2 Department of Industrial Engineering, South Tehran Branch, Islamic Azad university, Tehran, Iran

Abstract

This paper tries to determine the price, cost, local and optimization rate of national advertising in a supply chain with one manufacturer and two retailers. Two methods are assumed for advertising. The first one considers the situation, in which retailers do not advertise cooperatively; whereas in the second one, they have cooperative advertising. A model which is presented in this paper, is based on markets noise effects and disarray. So, after solving, optimal value for decision variables and optimal profit for chain members are gained. Game theory is used for solving this model, in which the retailers are followers and the manufacturer is leader. In the first method, we used Nash equilibrium because of the completion between the retailers. Yet in the second method the variables are the same because of the cooperation between them. At the end, a numerical example of sensitivity analysis is measured for the variable, and the reports are explained. One of the main results is that the competition between retailers, influences the manufacturer benefit. So that by increasing the competition between retailers, the manufacturer profit decreases.

Keywords

Main Subjects


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