Effects of Leader-follower Relationship on Supply Chains with Two Manufacturers and Retailer

Abstract

In supply chain management, it is necessary to realize dynamically reconfigurable supply chains that can flexibly respond to the change to make an optimal decision-making. The game theoretical approaches have been widely used for supply chain planning which has various leader-follower relationship. In this paper, we develop an approximate solution algorithm to derive equilibrium solutions with several leader-follower relationships. The proposed algorithm is applied to pricing game and the production planning game for two manufacturers and single retailer case. The effects on the leader-follower relationship on supply chains are investigated from computational experiments.