Service impact on customer demand and member profit in a supply chain

This paper analyzes the impact of provided services by the retailers and manufacturers for customers´ demand and members´ profit in supply chain. It focuses a supply chain structure with one manufacturer and a common retailer. The demands of customers depend on retailer price and service level. A game-theoretic framework is applied to obtain the equilibrium solutions for every entity in supply chain.In order to investigate the impact of service on the demand and supply chain members´ profit, when the manufacturer is a leader, we derive and compare equilibrium solutions for the supply chain under three different scenarios. Theses scenarios are for the case that manufacturer and retailer do not provide any service to customers; the case that retailer provides service to customers; and the case that manufacturer provides service to customers. We compared the results from these three scenarios and proposed the best scenario for our problem.