Competition of manufacturers for retailer shelf space

Diler, Betül
In this thesis, we consider two partially substitutable products sold through a twoechelon supply chain, consisting of two suppliers and one retailer. We assume a random aggregate demand that is split between the two products, so the products have separated random demand as long as both are available. In case of a stockout in one of the products, that product’s demand can spill over to the competing product, which causes a correlation between the final demand of the products and their stocking quantities. The retailer decides order quantities by considering the prices and the spillover rates of the products. The suppliers play a Stackelberg game on price to increase the retailer’s order quantities. We analyze the equilibrium pricing decision of the suppliers and ordering decision of the retailer in a three stage dynamic game for a single period. We investigate the effect of spillover rate on pricing decision of the suppliers, the effect of spillover rates on the inefficiency caused by decentralization in the supply chain and the effect of disregarding the spillover rates by one of the suppliers or all parties in the chain.
Citation Formats
B. Diler, “Competition of manufacturers for retailer shelf space,” M.S. - Master of Science, Middle East Technical University, 2016.