Pricing decision for substitutable products with retail competition in a fuzzy environment

Pricing decision for substitutable products with retail competition in a fuzzy environment

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Article ID: iaor201110555
Volume: 135
Issue: 1
Start Page Number: 144
End Page Number: 153
Publication Date: Jan 2012
Journal: International Journal of Production Economics
Authors: , ,
Keywords: stochastic processes, game theory
Abstract:

This paper studies the pricing problem of substitutable products in a supply chain with one manufacturer and two competitive retailers. The consumer demands and manufacturing costs are of uncertainty, which are described by fuzziness. Based on different market structures, one centralized pricing model and three decentralized pricing models are developed, and the corresponding analytical equilibrium solutions are obtained using the game‐theoretic approach. Finally, numerical examples are presented to illustrate the effectiveness of the theoretical results, and to gain additional managerial insights.

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