An investigation on research and development cost reduction and channel strategies in competing supply chains

With the intensification of market competition, the competition form of firms is evolving from the competition among firms to the competition among supply chains. This paper considers a market with two competing supply chains consisting of one supplier and one manufacturer. The two supply chains compete on products’ quantities and research and development (R&D) level when the two manufacturers conduct technological innovation. This paper analyses the supply chain competition in three scenarios: two decentralized supply chains (DD), one decentralized supply chain and one centralized supply chain (DC) and two centralized supply chains (CC). The results indicate that the production quantity, the R&D level and the total profit of the integrated supply chain in DC scenario are the largest, CC scenario comes second, those of the DD scenario come third and those of the decentralized supply chain in DC scenario are the smallest. CC strategy is the supply chain system’s Nash equilibrium, which is good for the both supply chains, and there is no prisoner's dilemma

Contracting for Competitive Supply Chains under Network Externalities and Demand Uncertainty

Based on network externalities and demand uncertainty environment, supply chain competition model is built; we identify the valid mechanism for the alternative range of profit-sharing contracts and also analyze the effect of product substitutability coefficient and network externalities on the alliance and profit-sharing contract. The results show that the vertical alliance contributes profit improvement to both the manufacturer and the retailer when the impact of network externalities on the product substitutability is not strong. However, vertical alliance will be out of operation when the effect of network externalities on the product substitutability is strong

Decision Making and the Price Setting Newsvendor: Experimental Evidence

We present an experimental study of the price-setting newsvendor problem, which extends the traditional framework by allowing the decision maker to determine both the selling price and the order quantity of a given item. We compare behavior under this model with two benchmark conditions where subjects have a single decision to make (price or quantity). We observe that subjects deviate from the theoretical benchmarks when they are tasked with a single decision. They also exhibit anchoring behavior, where their anchor is the expected demand when quantity is the decision variable and is the initial inventory level when price is the decision variable. When decision makers set quantity and price concurrently, we observe no significant difference between the normative (i.e., expected profit-maximizing) prices and the decision makers' price choices. Quantity decisions move further from the normative benchmarks (compared to when subjects have a single decision to make) when the ratio of cost to price is less than half. When this ratio is reversed, there is no significant difference between order levels in single- and multi-task settings. In the multidecision framework, we also observe a tendency to match orders and expected demand levels, which subjects can control using prices. © 2016 Decision Sciences Institute