About this Journal Submit a Manuscript Table of Contents
Discrete Dynamics in Nature and Society
Volume 2013 (2013), Article ID 726536, 10 pages
http://dx.doi.org/10.1155/2013/726536
Research Article

Stackelberg Game for Product Renewal in Supply Chain

School of Electrical Engineering, Zhengzhou University, Zhengzhou 450001, China

Received 8 November 2012; Accepted 27 January 2013

Academic Editor: Xiaochen Sun

Copyright © 2013 Yong Luo et al. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

Abstract

The paper studied the process of product renewal in a supply chain, which is composed of one manufacturer and one retailer. There are original product and renewal product in the supply chain. A market share shift model for renewal product was firstly built on a increment function and a shift function. Based on the model, the decision-making plane consisting of two variables was divided into four areas. Since the process of product renewal was divided into two stages, Stackelberg-Nash game model and Stackelberg-merger game model could be built to describe this process. The optimal solutions of product pricing strategy of two games were obtained. The relationships between renewal rate, cost, pricing strategy, and profits were got by numerical simulation. Some insights were obtained from this paper. Higher renewal rate will make participants’ profits and total profit increase at the same margin cost. What is more important, the way of the optimal decision making of the SC was that RP comes onto the market with a great price differential between OP and RP.