Analysis of Two-Period Supply Chain Game Based on Long-Term Strategy

The supply chain considered includes one supplier and one retailer. Each of them adopts long-term strategy, i.e., they maximize their own sum of profit in a two-period decision horizon. The model assumes that the estimation of distribution of the demand can be updated over time via the realization of sales. The optimal strategies for both supplier and retailer are acquired by analyzing the model under centralized and decentralized system. The activity of updating the demand information helps both supplier and retailer to increase their profit, and the retailer´s profit increment is larger.