Optimization for decentralized-dual-channel supply chain based on game theory

Manufacturers today are increasingly adopting a dual channel to sell their products, i.e., the traditional retail channel and an online direct channel. In the decentralized-dual-channel supply chain, leading-time and price of manufacturer and retailer are essential factor for the performance of this kind of supply chain, In this paper we present an analytical framework for leading-time and price decisions for decentralized-dual-channel supply chain based on game theory, provide a decision making aid for manufacturer and retailer. With this analytical model, manufacturer as leader, determining the delivery leading time, the direct sale price in the direct channel and the wholesale price; then retailer as follower, can determining his own leading time and retail price that guarantee Stackelberg equilibrium. Under this equilibrium condition, the manufacturer and the retailer both prefer a dual-channel supply chain.