Dynamic model of a supply chain network with sticky price

Zhaobo Chen (), Chunying Tian (), Ding Zhang () and Dongyan Chen ()
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Zhaobo Chen: Taiyuan University of Science and Technology
Chunying Tian: Harbin University of Science and Technology
Ding Zhang: State University of New York
Dongyan Chen: Harbin University of Science and Technology

Operational Research, 2020, vol. 20, issue 2, No 8, 649-670

Abstract: Abstract This article aims at studying the strategic behaviours of competing firms with sticky retail pricing for the product. We base our study in the context of a supply chain network comprising multiple manufacturers and retailers. The manufacturers are involved in the production of a homogeneous product while the retailers purchase the product and sell it to consumers in the end markets. The retail price of the product is sticky. A differential variational inequality model is proposed to handle the multiple agents and their independent behaviours. Furthermore, the existence and uniqueness of the solution to the dynamic supply chain network with sticky price are shown. A numerical example is provided to illustrate the model and the computational results of equilibrium behaviour are presented. This paper contributes to literature by introducing price stickiness into supply chain networks and developing a differential variational inequality model to analyze the dynamic strategies of firms in the decentralized supply chain network.

Keywords: Supply chain network; Sticky price; Differential Nash game; Differential variational inequality (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (1)

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DOI: 10.1007/s12351-017-0354-1

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