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Pricing decisions for substitutable products with horizontal and vertical competition in fuzzy environments

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Abstract

This paper considers the pricing decisions of substitutable products which are produced by duopolistic manufacturers respectively and then sold by one common retailer to the consumers. Both the manufacturing cost and the customer demand for each product are characterized as fuzzy variables. Six expected value models are developed to explore the effects of the duopolistic manufacturers’ three pricing strategies (i.e. Bertrand competition, Stackelberg competition, cooperation) and vertical competition between the manufacturers and the retailer on the optimal pricing decisions and channel profit-split of a two echelon supply chain, and the corresponding analytical solutions are derived. Finally, a numerical example is given to illustrate the effectiveness of the proposed models, and to gain additional managerial insights.

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Acknowledgments

The authors wish to express their sincerest thanks to the editors and anonymous referees for their constructive comments and suggestions on the paper. We gratefully acknowledge the support of (i) National Natural Science Foundation of China, Nos. 71371186, and 71001106 for J. Wei; (ii) National Natural Science Foundation of China, Nos. 71301116, 71372100, and 71002106 for J. Zhao.

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Authors and Affiliations

  1. General Courses Department, Military Transportation University, Tianjin, 300161, People’s Republic of China

    Jie Wei

  2. School of Science, Tianjin Polytechnic University, Tianjin, 300387, People’s Republic of China

    Jing Zhao

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  1. Jie Wei
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  2. Jing Zhao
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Correspondence to Jie Wei.

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Wei, J., Zhao, J. Pricing decisions for substitutable products with horizontal and vertical competition in fuzzy environments. Ann Oper Res 242, 505–528 (2016). https://doi.org/10.1007/s10479-014-1541-6

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