Coordinating pricing and inventory decisions in a multi-level supply chain: A game-theoretic approach

This paper concerns coordination of enterprise decisions such as suppliers and components selection, pricing and inventory in a multi-level supply chain composed of multiple suppliers, a single manufacturer and multiple retailers. The problem is modeled as a three-level dynamic non-cooperative game. Analytical and computational methods are developed to determine the Nash equilibrium of the game. Finally, a numerical study in computer industry is conducted to understand the influence of the market scale parameter and the components selection strategy on the optimal decisions and profits of the supply chain as well as its constituent members. Several research findings have been obtained.

Research highlights► Coordination pricing and inventory decisions in a multi-level supply chain is studied. ► Product family design is incorporated with the pricing and inventory coordination problem. ► A game-theoretic model is proposed to optimize the suppliers and components selection, pricing and inventory decisions of the supply chain members.