The cooperative and competitive strategies in a supply chain with a group buying mechanism

Pricing is widely used as an effective approach in supply chain management, in particular in the two important aspects of supply chain strategy: competition and coordination. The main purpose of this thesis is to investigate a new pricing mechanism for supply chain management, on the basis of an idea transplanted from group buying pricing (GBP). The GBP offers to provide a price discount based on the buyers' total order quantity, under which a buyer may bid at the current price, but may actually get a lower one at a later time when the total order quantity reaches a level to trigger a price drop. With such a mechanism, the supplier wishes to enhance the sales of his product, whereas a buyer may take the appropriate strategy based on the likely reactions of other buyers, so that he can hopefully get a lower price than he otherwise would do. We are concerned about the understanding and characterizations of strategies and decisions that the suppliers and buyers would make in a supply chain installed with such a pricing mechanism.; To address this problem, we consider a two-echelon supply chain with a single supplier servicing a set of retailers, in which the supplier uses a GBP mechanism, while the retailers decide their order quantities considering the likely reactions of other retailers. In such a supply chain, it is imperative for the retailers to take the right strategies and decisions, considering whether the other retailers are competing or cooperating. On the other hand, it is also critical for the supplier to design the proper pricing model and parameters, based on information on the likely competition and cooperations among the buyers (retailers). There are a number of interesting issues to explore in this setting. We focus, in this thesis, on the following situations: (1) Noncooperative retailers, with independent market demands; (2) Cooperative retailers, with independent market demands; (3) Noncooperative or cooperative retailers, in a competing market with dependent market demands; (4) Dynamic bidding.; By supposing the higher price level equals the optimal flat price, we obtain the following results: (a) the optimal price vector of the GBP (the price levels and the order quantity to trigger a price drop) for the supplier; (b) the cooperating or the competing strategies among the retailers, given the price model of the supplier; and (c) the possible price vector to facilitate coordination between the supplier and the retailers to ensure and enhance each other's gain.; Apart from the understanding and characterizations of the optimal strategies and decisions for each party involved in the supply chain, we also show the efficiency enhancement and improvement by the GBP in different scenarios as compared with the traditional flat price mechanism.