Optimizing Pricing Strategies in a Multinational Supply Chain Dealing with Product Shortages caused by Production Delays

Abstract

This paper studies the pricing decisions when a multinational supply chain is under the situation of shortage of product.The supply chain consists of one manufacturer staying in the exporting country, and one retailer staying in the importing country.The main theme was to develop a model that will achieve perfect coordination between the manufacture and retailer should there be shortage of product. The stackelberg game theory was used to analysis the pricing behavior of the supply chain members. The General Model without Demand Disruption, the Model with Demand Disruption without Recognition and the Model with Demand Disruption with Recognition, were used for this analysis. The best model was the Demand Disruption with Recognition.