A Game Theory Approach to Multi-Period Planning of Pricing, Ordering, and Inventory Decisions for a Make-to-Order Manufacturing Supply Chain

Supply chain members coordinate with each other in order to obtainmore profit. the major mechanisms for coordination among supplychain echelons are pricing, inventory management, and orderingdecisions. this paper concerns these mechanisms in a multi-echelonsupply chain consisting of multiple suppliers, one manufacturer, andmultiple retailers in order to study the price and lead-time competition,where the make-to-order production mode is employed and consumersare sensitive to retail price and lead time. in the current study, a novelinventory model is presented, where the manufacturer has an exclusivesupplier for every required component of its final product. theinteractions and decisions of the firms are observed in multiple timeperiods. moreover, each supply chain member has equal power andmakes their decisions simultaneously. the proposed model considers therelationships among three-echelon supply chain members based on anon-cooperative nash game with pricing and inventory decisions. aniterative solution algorithm is proposed to determine the nashequilibrium point of the game. an example is presented to study theapplication of the model as well as the effectiveness of the algorithm.