Coordination and Competition in a Duopoly with Two Manufacturers and Two Retailers with a Wholesale Price Contract and Demand Uncertainty

This study analyzes a supply chain involving two competing manufacturers that sell their products through two common competing retailers. the manufacturers’ products are the same, yet come out with different brands in the market. the retailers face stochastic demand where demand is the decreasing function of price with an additive uncertain part. manufacturers compete on supplying orders where retailers compete on selling price. each manufacturer sets a wholesale price contract with retailers similarly. in this study, the supply chain coordination with the wholesale price contract under competition and demand uncertainty is examined. the analytical results show that, under coordinated conditions, manufacturers do not obtain any positive profit and, consequently, the retailers intend to increase wholesale prices. on the other hand, manufacturers can increase wholesale prices until the retailers’ profit becomes zero. hence, with a numerical study for actual cases, it is found that changing demand sensitivity and competition intensity affects the optimal ordering and pricing decisions. moreover, increasing competition sensitivity increases supply chains’ efficiency, stocking level, and selling price. the concluding remarks show that further investigations are required for exploring the possibility of coordination under competition by other contractual mechanisms.