The effect of promotional cost sharing on the decisions of two-level supply chain with uncertain demand

Abstract

In much of today's competitive marketplace, consumers have the opportunity to choose where they spend their money based on their examination of a company's corporate social responsibility (CSR). A company's social reputation and its promotional efforts may influence consumer choice. Sustainable development is highly regarded by governments, experts, decision-makers and managers in organizations and two-level supply chains. This supply chain includes a manufacturer (acting as leader) and a retailer (acting as follower), both of whom face demand uncertainty. In this article, the cost of advertising is considered in two ways for the manufacturer and the retailer. In the first model, the retailer determines the optimal retail price and order quantity, and the manufacturer determines the optimal wholesale price and the promotional efforts value so that their profits are maximized. In the second model, the retailer determines the optimal retail price, order quantity, and promotional efforts value, and the manufacturer determines the optimal wholesale price. We will also study the impact of promotional cost sharing on the coordination of the supply chain and the issue will be further explained with numerical examples. Therefore, in this research, the simultaneous effect of increased advertising and value consumer surplus is studied We examine cases when the retailer is a provider of promotional cost and profit, when consumer surplus is directed toward the retailer, and when both retailer and manufacturer achieve higher profits than when the manufacturer is responsible for promotional cost and profit.

Optimal pricing and choice of platform advertising schemes considering across‐side network effect

“…Our work is also related to the literature on advertising in the market, for example, Chutani and Sethi (2018); He et al (2009); Servaes and Tamayo (2013); Taleizadeh et al (2020); Thomas (2020) and Zhang et al (2020). design various advertising schemes in which the manufacturer-controlled advertising scheme can lead to a higher advertising intensity, and the retailer-controlled advertising scheme can bring a lower wholesale price.…”

Revenue and risk sharing in view of uncertain demand during the pandemics

“…They found that under certain conditions, a price-dependent base stock policy is optimal on the both backorder and lost-sale cases. Taleizadeh et al [40] investigated the effect of cost of advertisement and promotional cost sharing on the coordination of a two-echelon supply chain considering under uncertain demand. Yadav et al [49] proposed a non-cooperative Stackelberg game model in a two-level supply chain with imperfect quality and allowable shortage.…”

An integrated fuzzy intuitionistic sustainability assessment framework for manufacturing supply chain: a study of UK based firms

“…The supply chain considering the triple bottom line including economic, environmental and societal dimensions of sustainability plays a vital role in achieving Sustainable Development Goals. Even though the area of sustainable supply chain management (SSCM) has received much attention from both quantitative and empirical modelling researchers within the last two decades, the research into the development of practical decision-making tools and frameworks for manufacturing supply chain sustainability is still evolving (Korpela et al 2001;Soheilirad et al 2017;Taleizadeh et al 2018). Seuring and Müller (2008) provided critical attributes of sustainable supply chain management by identifying the simultaneous consideration of economic, environmental and social impacts of the supply chain.…”