Product Line Design Decisions In Supply Chains

Nowadays,in order to gain competitive advantage,enterprises must better satisfy consumers than the competitors.Providing a product line is an effective way to meet heterogeneous consumers and enlarge market.However,product line design problem is a very complex one,which includes many related variables and can be influenced by other supply chain participants.In this paper,so as to gain some management insights,we study the product line design decisions with some methods,such as,game theory,marketing theory and consumer purchasing behavior.Main contents and results are listed in the following.Firstly,the enterprise should analysis the microenvironment,macro environment,together with consumer market to find out the best opportunity.After that,the firm needs to consider the purchasing behavior of the consumers with respect to reduce the mismatch between the supply and the need.We mainly focus on four aspects of product line design decisions and emphasis the importance of the relationships among them.While implementing product variety,the company ought to consider the interaction among products.Secondly,while product line extension can better satisfy the needs of the consumers,the operation risk rises as well.Different kinds of players have different attitudes to risk,so in this dissertation we mainly consider the effect of risk attitudes on product line extension decisions.We develop a Stackelberg game model of a supply chain with one manufacturer and one retailer to investigate the product line extension strategy,where the two players are risk averse.The extension decision of the manufacturer depends on both the risk attitudes of the players and product substitutability.The risk aversion may invert the effect of the decentralization of supply chain on product line length;and the manufacturer extends its product line if the quality cost factor is not too great.Thirdly,with the aim of study the effect of competition,we develops a model for remanufacturing decisions in a three-stage supply chain with one manufacturer,one retailer and one external local remanufacturer.By comparing the results with and without competition,we find that the manufacturer is willing to participate in remanufacturing even when the product substitutability is higher when there is an outside competitor.We also find that the manufacturer has a higher incentive to extend its product line in the centralized channel than the decentralized channel;and the competition can strengthen its motivation to extend the line.Finally,we develop two game theoretic models of a one-supplier and one-manufacturer supply chain to investigate the supplier’s strategic wholesale pricing and the manufacturer’s commonality strategy.The manufacturer has three commonality strategies:common high-quality component,common low-quality component,and different components.We consider two scenarios,wholesale price first scenario and commonality strategy first scenario.Under wholesale price first scenario,we identify the range of each commonality strategy.We find that the common low-quality component strategy is harmful to the supplier.Under commonality strategy first scenario,the common low-quality component strategy may exist.By comparing the two scenarios,we find that(i)the equilibrium outcomes under two scenarios are identical if the unit production cost of low-quality component is medium;and(ii)there exists a first-mover advantage for the two players.