Price-Service Competition and Cooperation in a Supply Chain Distribution System

The competition and cooperation issues are jointly addressed in a supply chain distribution system consisting of a supplier and N independent retailers. These retailers face their individual stochastic demand markets, but they compete with each other through price and service two stage operation. The price and service level equilibria are derived respectively in competition and cooperation and compared in case of ceteris paribus assumption. It indicates that competition leads to lower price, while a relative balance point exists between two kinds of competitive intensity. These results provide decision-making reference for firms in competitive markets. Finally, they are validated through some numerical examples and the impact of contract parameters and competitive intensity on equilibria is also included.