TITLE:
Supply Chain Models with Considerations of Co-Op Advertising and Capacity Constraints
AUTHORS:
Fan Yang
KEYWORDS:
Supply Chain, Capacity Constraints, Cooperative Advertising
JOURNAL NAME:
Open Journal of Business and Management,
Vol.6 No.2,
April
30,
2018
ABSTRACT: Today’s marketing competition focuses on the supply chain members to make
its own interests maximize through cooperation. This article establishes a
simple secondary supply chain consisting of a retailer and a manufacturer.
Through the establishment of a Stackelberg game model and a partnership
game model, we study the decision of the member enterprises in the supply
chain under the restriction of capacity. The research results show that if the
production capacity is smaller, the manufacturer will choose full-load production.
If the production capacity is sufficient, the manufacturer will no longer
produce more products because its profit may be lost. The lack of production
capacity makes the manufacturer not take the initiative to share the advertising
costs of retailers. But when the capacity is sufficient, the manufacture
shares 1/3 of advertising costs. In addition, whether manufacturers and retailers
choose to cooperate in the case of a small capacity, the profit of the supply
chain will not change.