A bi-level programming model for decentralized manufacturer-distributer supply chain considering cooperative advertising

Document Type : Article

Authors

Department of Industrial Management, Management and Accounting Faculty, Shahid Beheshti University, G.C., Tehran, Iran

Abstract

This paper studies a bi-level decentralized supply chain consisting of one manufacturer and one distributor. Along with global advertising, the manufacturer participates in part of local advertising expenditure incurred by the distributor. Bi-level programming is applied to model the relationship between the manufacturer and distributer under two power scenarios of Stackelberg game framework. In the first scenario, we consider the manufacturer as the leader and in the latter, we allow the distributer to act as the dominant member of the supply chain. In order to tackle bi-level programming models, a meta-heuristic genetic algorithm with hierarchical structure is developed for each scenario and optimal policies for the members in terms of pricing, advertising, inventory and demand allocation are determined. Finally, several computational experiments are conducted on data obtained from an automotive spare parts supply chain to demonstrate the validity of the developed models and compare the benefits of members as well as of the entire system.
 

Keywords

Main Subjects


References

1. Taleizadeh, A.A., Niaki, S.T.A., and Wee, H.-M. Joint single vendor-single buyer supply chain problem with stochastic demand and fuzzy lead-time", Knowledge-Based Systems, 48, pp. 1-9 (2013).
2. Giannoccaro, I. and Pontrandolfo, P. Supply chain coordination by revenue sharing contracts", International Journal of Production Economics, 89(2), pp. 131-139 (2004).
3. Von Stackelberg, H., The Theory of the Market Economy,
Oxford University Press (1952).
4. Koh, A. A metaheuristic framework for bi-level programming
problems with multi-disciplinary applications",
in Metaheuristics for Bi-Level Optimization,
Springer, pp. 153-187 (2013).
5. Hutchins, M.S., Cooperative Advertising: The Way to
Make it Pay, Ronald Press (1953).
6. Herrington, J.D. and Dempsey, W.A. Comparing the
current e ects and carryover of national-, regional-,
and local-sponsor advertising", Journal of Advertising
Research, 45(01), pp. 60-72 (2005).
7. Young, R.F. and Greyser, S.A., Managing Cooperative
Advertising: A Strategic Approach, Lexington Books
(1983).
8. Aust, G. and Buscher, U. Cooperative advertising
models in supply chain management: A review",
European Journal of Operational Research, 234(1), pp.
1-14 (2014).
9. Ben-Ayed, O. and Blair, C.E. Computational dif-
culties of bilevel linear programming", Operations
Research, 38(3), pp. 556-560 (1990).
10. Xie, J. and Ai, S. A note on Cooperative advertising,
game theory and manufacturer-retailer supply chains",
Omega, 34(5), pp. 501-504 (2006).
11. Ming, L., Shuguang, S., and Dan, Y. A study of the
joint advertising channels", Journal of Service Science
and Management, 2(04), p. 418 (2009).
12. Tsou, C.-S., Fang, H.-H., Lo, H.-C., and Huang, C.-H.
A study of cooperative advertising in a manufacturerretailer
supply chain", International Journal of Information
and Management Sciences, 20(1), pp. 15-26
(2009).
13. Ahmadi-Javid, A. and Hoseinpour, P. On a cooperative
advertising model for a supply chain with one
manufacturer and one retailer", European Journal of
Operational Research, 219(2), pp. 458-466 (2012).
14. Zhang, J., Xie, J., and Chen, B. Cooperative advertising
with bilateral participation", Decision Sciences,
44(1), pp. 193-203 (2013).
O. Amirtaheri et al./Scientia Iranica, Transactions E: Industrial Engineering 25 (2018) 891{910 909
15. Yue, J., Austin, J., Wang, M.-C., and Huang, Z.
Coordination of cooperative advertising in a twolevel
supply chain when manufacturer o ers discount",
European Journal of Operational Research, 168(1), pp.
65-85 (2006).
16. Szmerekovsky, J.G. and Zhang, J. Pricing and twotier
advertising with one manufacturer and one retailer",
European Journal of Operational Research,
192(3), pp. 904-917 (2009).
17. Xie, J. and Neyret, A. Co-op advertising and pricing
models in manufacturer-retailer supply chains", Computers
& Industrial Engineering, 56(4), pp. 1375-1385
(2009).
18. Xie, J. and Wei, J.C. Coordinating advertising and
pricing in a manufacturer-retailer channel", European
Journal of Operational Research, 197(2), pp. 785-791
(2009).
19. SeyedEsfahani, M.M., Biazaran, M., and Gharakhani,
M. A game theoretic approach to coordinate pricing
and vertical co-op advertising in manufacturer-retailer
supply chains", European Journal of Operational Research,
211(2), pp. 263-273 (2011).
20. Aust, G. and Buscher, U. Vertical cooperative advertising
and pricing decisions in a manufacturer-retailer
supply chain: A game-theoretic approach", European
Journal of Operational Research, 223(2), pp. 473-482
(2012).
21. Haifang, C., JinLei, L., andWeilai, H. A coordination
model of cooperative advertising based on revenue
sharing contract", in Service Systems and Service
Management, 2006 International Conference on, IEEE
(2006).
22. Karray, S. Periodicity of pricing and marketing efforts
in a distribution channel", European Journal of
Operational Research, 228(3), pp. 635-647 (2013).
23. Kunter, M. Coordination via cost and revenue sharing
in manufacturer-retailer channels", European Journal
of Operational Research, 216(2), pp. 477-486 (2012).
24. Yugang, Y., Liang, L., and Huang, G.Q. Leaderfollower
game in vendor-managed inventory system
with limited production capacity considering wholesale
and retail prices", International Journal of Logistics:
Research and Applications, 9(4), pp. 335-350 (2006).
25. Mokhlesian, M. and Zegordi, S.H. Application of multidivisional
bi-level programming to coordinate pricing
and inventory decisions in a multiproduct competitive
supply chain", The International Journal of Advanced
Manufacturing Technology, 71(9-12), pp. 1975-1989
(2014).
26. Sadigh, A.N., Mozafari, M., and Karimi, B.
Manufacturer-retailer supply chain coordination: A
bi-level programming approach", Advances in Engineering
Software, 45(1), pp. 144-152 (2012).
27. Esmaeili, M., Aryanezhad, M.-B., and Zeephongsekul,
P. A game theory approach in seller-buyer supply
chain", European Journal of Operational Research,
195(2), pp. 442-448 (2009).
28. Esmaeili, M. and Zeephongsekul, P. Seller-buyer
models of supply chain management with an asymmetric
information structure", International Journal
of Production Economics, 123(1), pp. 146-154 (2010).
29. Swami, S. and Shah, J. Channel coordination in
green supply chain management: The case of package
size and shelf-space allocation", Technology Operation
Management, 2(1), pp. 50-59 (2011).
30. Simon, J.L. and Arndt, J. The shape of the advertising
response function", Journal of Advertising
Research, 20(4), pp. 11-28 (1980).
31. Shahvari, O. and Logendran, R. An enhanced tabu
search algorithm to minimize a bi-criteria objective
in batching and scheduling problems on unrelatedparallel
machines with desired lower bounds on batch
sizes", Computers and Operations Research, 77, pp.
154-176 (2017).
32. Shahvari, O. and Logendran, R. Hybrid
ow shop
batching and scheduling with a bi-criteria objective",
International Journal of Production Economics, 179,
pp. 239-258 (2016).
33. Shahvari, O. and Logendran, R. Bi-criteria batch
scheduling in hybrid
ow shop", Proceedings of the
2016 Industrial and Systems Engineering Research
Conference (ISERC2016), California, USA (2016).
34. Shahvari, O. and Logendran, R. Bi-criteria batch
scheduling on unrelated-parallel machines", Proceedings
of the 2015 Industrial and Systems Engineering
Research Conference (ISERC2015), Tennessee, USA
(2015).
35. Shahvari, O., Salmasi, N., Logendran, R., and Abbasi,
B. An ecient tabu search algorithm for
exible
ow
shop sequence-dependent group scheduling problems",
International Journal of Production Research, 50(15),
pp. 4237-4254 (2012).
36. Oduguwa, V. and Roy, R. Bi-level optimisation using
genetic algorithm", in Arti cial Intelligence Systems,
2002.(ICAIS 2002). 2002 IEEE International Conference
on, IEEE (2002).
37. Sivanandam, S. and Deepa, S., Introduction to Genetic
Algorithms, Springer Science & Business Media (2007).
38. Koksoy, O. and Yalcinoz, T. Robust design using
Pareto type optimization: a genetic algorithm with
arithmetic crossover", Computers & Industrial Engineering,
55(1), pp. 208-218 (2008).
39. Huang, Z., Li, S.X., and Mahajan, V. An analysis
of manufacturer-retailer supply chain coordination in
cooperative advertising", Decision Sciences, 33(3), pp.
469-494 (2002).
40. Alirezaei, A. and KhoshAlhan, F. Coordination of
pricing and co-op advertising models in supply chain:
A game theoretic approach", International Journal of
Industrial Engineering Computations, 5(1), pp. 23-40
(2014).
41. Taleizadeh, A.A. and Charmchi, M. Optimal advertising
and pricing decisions for complementary products",
Journal of Industrial Engineering International, 11(1),
pp. 111-117 (2015).