Speech at ICAOR 2014

At the 6th International Conference on Applied Operational Research (ICAOR 2014, 29.-31.07.2014) in Vancouver, Canada, our member of staff, Gerhard Aust, gave a speech on the subject "Pricing, product quality, and retail service in a three-echelon supply chain".

The related article was published in the series Lecture Notes in Management Science and can be accessed here.

Abstract:
This paper proposes a model of a three-echelon supply chain consisting of one supplier, one manufacturer, and one retailer, who serve customer demand that is sensitive to retail price, product quality, and retail service. By means of game theory, the firms’ optimal strategies regarding margins, quality level, and service level are determined analytically for three different scenarios: (a) a symmetrical distribution of power within the supply chain (Nash game); (b) a dominant manufacturer (Manufacturer Stackelberg game); (c) a joint profit maximization of the firms (Co-operation game). The solutions are analyzed on the base of a first numerical example, which proves that the presented model yields logically consistent results.