Competition of pricing and service investment between iot-based and traditional manufacturers
Zhiping Zhou Xinbao Liu Jun Pei Panos M. Pardalos Hao Cheng
Journal of Industrial & Management Optimization 2018, 14(3): 1203-1218 doi: 10.3934/jimo.2018006

This paper develops a multi-period product pricing and service investment model to discuss the optimal decisions of the participants in a supplier-dominant supply chain under uncertainty. The supply chain consists of a risk-neutral supplier and two risk-averse manufacturers, of which one manufacturer can provide real-time customer service based on the Internet of Things (IoT). In each period of the Stackelberg game, the supplier decides its wholesale price to maximize the profit while the manufacturers make pricing and service investment decisions to maximize their respective utility. Using the backward induction, we first investigate the effects of risk-averse coefficients and price sensitive coefficients on the optimal decisions of the manufacturers. We find that the decisions of one manufacturer are inversely proportional to both risk-averse coefficients and its own price sensitive coefficient, while proportional to the price sensitive coefficient of its rival. Then, we derive the first-best wholesale price of the supplier and analyze how relevant factors affect the results. A numerical example is conducted to verify our conclusions and demonstrate the advantages of the IoT technology in long-term competition. Finally, we summarize the main contributions of this paper and put forward some advices for further study.

keywords: Stackelberg game IoT pricing service investment risk
A discretization based smoothing method for solving semi-infinite variational inequalities
Burcu Özçam Hao Cheng
Journal of Industrial & Management Optimization 2005, 1(2): 219-233 doi: 10.3934/jimo.2005.1.219
We propose a new smoothing technique based on discretization to solve semi-infinite variational inequalities. The proposed algorithm is tested by both linear and nonlinear problems and proven to be efficient.
keywords: Variational inequalities smoothing. semi-infinite

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