Pricing decisions of complementary products in a two-level fuzzy supply chain

Abstract

Pricing decisions of two complementary products in a two-level fuzzy supply chain with two manufacturers and one common retailer are studied in this paper. By considering the two manufacturers and one common retailer’s leader–follower relationship, the two manufacturers’ pricing strategy and the fuzzy uncertainties associated with the manufacturing costs and customer demands of the complementary products, seven pricing games are considered. The corresponding closed-form optimal pricing decisions are obtained in the seven pricing games. Through using numerical studies and sensitivity analysis of parameters’ fuzzy degree, we compare the analytical results of different games and investigate the firms’ optimal decisions facing changing pricing environments. At last, we analyse the effect of the fuzzy degree of key parameters on optimal prices, maximal expected demands and maximal expected profits of different games. Some interesting and valuable managerial insights are established.

Keywords:

• Supply chain management
• fuzzy methods
• game theory
• complementary product
• pricing

Acknowledgements

The authors wish to express their sincerest thanks to the editors and anonymous referees for their constructive comments and suggestions on this paper.

Notes

No potential conflict of interest was reported by the authors.

Additional information

Funding

This work was supported by National Natural Science Foundation of China [grant numbers 71371186 and 71402084]; National Natural Science Foundation of China [grant number 71372100]; The Major Program of the National Social Science Fund of China [grant number 13&ZD147].