Competitive pricing of substitute products under supply disruption.

ABSTRACT: There has been an increased interest in optimizing pricing and sourcing decisions under supplier competition with supply disruptions. In this paper, we conduct an analytical game-theoretical study to examine the effects of supply capacity disruption timing on pricing decisions for substitute products in a two-supplier one-retailer supply chain setting. We investigate whether the timing of a disruption may significantly impact the optimal pricing strategy of the retailer. We derive the optimal pricing strategy and ordering levels with both disruption timing and product substitution. By exploring both the Nash and Stackelberg games, we find that the order quantity with the disrupted supplier depends on price leadership and it tends to increase when the non-disrupted supplier is the leader. M

SUBMITTER: Gupta V 

PROVIDER: S-EPMC7236753 | biostudies-literature | 2021 Jun

REPOSITORIES: biostudies-literature