Pricing Decisions for Complementary Products of Competitive Supply Chains

This study considers pricing, production and transportation decisions in a stackelberg game between three-stage, multi product, multi-source and single-period supply chains called leader and follower. these chains consist of manufacturers, distribution centers (dcs), and retailers. competition type is horizontal and sc vs. sc. the retailers in two chains try to maximize their profit through pricing of products in different markets and with regard to the transportation and production costs. a bi-level nonlinear programming model is formulated in order to represent the stackelberg game. pricing decisions are based on discrimination pricing rules, where we can put different prices in different markets. after that, the model is reduced to a single-level nonlinear programming model by replacing karush- kuhn-tucker conditions for the lower level (follower) problem. finally, a numerical example is solved in order to analyze the sensitivity of effective parameters to price and profit, and some managerial insights are explained during this analysis.