Pricing decisions for substitutable products with a common retailer in fuzzy environments

The pricing problem of substitutable products in a fuzzy supply chain is analyzed by using game theory in this paper. There are two substitutable products produced by two competitive 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. How the two manufacturers and the common retailer make their own pricing decisions about wholesale prices and retail prices are explored under four different scenarios, and the corresponding expected value models are developed in this paper. Finally, a numerical example is given to illustrate the effectiveness of the proposed supply chain models.

► The pricing problem of substitutable products with a common retailer is analyzed.
► Both the manufacturing cost and customer demand are characterized as fuzzy variables.
► Four expected value models are developed.
► The corresponding analytical solutions are given.