Advertising And Pricing Policies In A Two-echelon Supply Chain With A Capital-constrained Retailer

With the development of economic globalization and the increasing competition in the market,advertising as an effective marketing method,has become one of the important means to improve the enterprises' s competitiveness and market share.However,the advertising investment is dependent on funds.For small and medium sized enterprises,capital constraint will not only restrict their development,but also have negative effects on the supply chain.Therefore,in the case of advertising,how to reasonably use limited funds and make the best operation decisions become the main concern of the capital constrained enterprises.This paper considers the problem of advertising and financing in enterprises' operation,and studies the optimal pricing and advertising decisions under a two-echelon supply chain consisting of a single supplier and a capital-constrained retailer,in which the market demand is sensitive to retail price and advertising expenses.Based on the delay payment financing provided by the supplier,we establish the Stackelberg game models under two different situations: information sharing and non-information sharing,to obtain the optimal decisions,then the numerical simulations illustrate our theoretical results.The article finally compares the supply chain members' decisions and profit under information sharing and non-information sharing,to demonstrate the impact of information sharing on the supply chain with capital constraint and advertising inputs.It has been found that the retailer with less initial capital prefers to fully invest in advertisement,whereas the retailer with more initial capital only partially invests in advertisement.The numerical simulations show the impacts of the advertising elasticity and interest rate on the wholesale and retail pricing,and the retailer's advertising policies in different initial capital levels always benefit the supply chain.From the comparision of information sharing and non-information sharing,we find that the retailer sharing information can get a lower wholeprice,then determine a lower retail price and a higher adverting investment in low market demand,while the situation is opposite in high market demand.According to numerical examples,it has been found that information sharing can reduce the expected profit of retailers and increase the expected profits of suppliers,but information sharing does not always benefit for the supply chain.