Production Decision,Channel Strategy And Information Sharing Under The Competition Between Supply Chains

With the development of economic globalization,the competition among single firms has been gradually promoted to be the competition among supply chains.Firms have to consider the competitive supply chains when making production decision.In addition to the production decision,there are also other significant operational decisions,such as reliability improvement,channel strategy and information sharing.The operational decisions are respectively to deal with the upstream firm’s supply risk,the downstream firm’s channel conflict,and the information asymmetry between upstream and downstream firms.The operational decisions also have a significant impact on the production decision.Focusing on the competitive supply chains,this dissertation investigates the downstream firms’ reliability improvement,the upstream firm’s channel strategy including channel encroachment and channel choice,and the downstream firm’s information sharing strategy.By further exploring the influence of the above operational strategies on production decision,this dissertation enriches the existed theoretical research on competitive supply chains,and provides significant practical guidance for firms when making operational decisions.The main content of the research includes the following four aspects:First,considering the upstream firms characterized with supply risk,this paper investigates the interaction between competitive downstream firms’ reliability improvement and production decision.By investigating the expected input quantity in monopoly and duopoly model,we find that the reliability improvement intensifies competition with lower market potential but weakens competition with higher market potential.While in terms of the expected quantity output to the competing market,the reliability improvement always intensifies competition.By further examining the optimal effort level in monopoly and duopoly model,we find that the competition always reduces the effort level of reliability improvement and this impact increases in the probability of the improvement success.Second,considering two competitive firms sell products through a single retailer,this paper explores the interaction between firm’s channel encroachment strategy(direct channel establishment)and production decision.By investigating the encroachment strategy,we find that whether there is upstream competition or not,the firm abandons the retail channel and chooses to sell products only through the direct channel,with identical operational cost in both direct and retail channels and low direct channel establishment cost.By comparing the firm’s encroachment strategy with and without upstream competition,the result shows that the upstream competition postpones firm’s encroachment strategy.By exploring the impact of firm’s encroachment strategy on his opponent and retailer’s profit,we find that once the firm chooses to encroach on the market,the upstream competitive firms form a conspiracy through wholesale price decision.And the conspiracy rearranges the profit of the retailer who was the exclusive seller in the market.As a result,the two competitive firms benefit from the encroachment strategy,whereas the retailer hurts.By examining the impact of firm’s encroachment strategy on the total supply chain profit,we derive that the encroachment strategy enhances the supply chain profit with weak upstream competition while reduces the supply chain profit with intense upstream competition.In terms of the production decision,the analysis shows that the invasive firm outputs more to the market,whereas his opponent outputs less.The total quantity output to the market increases.Third,considering the upstream firm chooses both direct and retail channel to sell his products,this paper examines the effect of different market structure,and the substitutability or complementarity between the two channels,on firm’s channel choice in competitive supply chains.The result shows that,in a Cournot competition model,the firm always chooses dual channel.In a Bertrand competition model,the firm prefers dual channel only with substitutive or weaker complementary channels.If the complementarity between the two channels is strong,the firm chooses to sell products only through the retail channel.By examining the effect of dual channel strategy,we find that Cournot competition makes the firm and his downstream retailer benefits from the dual channel strategy,while the profit of his opponent does not change.And hence,the total supply chain profit increases.In the Bertrand competition model,with substitutive channels both upstream firms and downstream retailer benefits from the dual channel strategy.And the total supply chain profit increases.In terms of the production decision,both Cournot and Bertrand competition make the ducal channel strategy intensify market competition by increasing the total quantity output to the market.Last,considering the downstream retailer has private information about market demand,this paper analyzes the interaction between upstream firm’s channel choice and downstream retailer’s information sharing strategy in competitive supply chains.The result shows that in a Cournot competition model,the upstream firm always chooses the dual channel.In a Bertrand competition model,the retailer’s information sharing strategy suppresses firm’s dual channel strategy with strong complementarity between the direct and retail channel.By investigating the retailer’s information sharing strategy,we find that in the Cournot competition model,the firm’s dual channel choice refrains(promotes)retailer’s information sharing strategy with substitutive(complementary)distribution channels.In the Bertrand competition model,the numerical study shows that,if the direct and the retail channel are complementary,the firm’s dual channel choice suppresses retailer’s information sharing strategy,which is opposite with the conclusion in the Cournot competition model.If the two channels are substitute,the firm’s dual channel strategy suppresses(promotes)the retailer’s information sharing strategy with weaker(strong)upstream competition.In terms of the production decision,we find that,both upstream firms charge less wholesale price in expectation with information sharing in both Bertrand and Cournot competition models.And the firm with direct channel inputs more to the retail channel,while his opponent inputs less to the retail channel.The retailer outputs more to the market.