Coordination models of cooperative advertising under stochastic demand in a one-manufacturer two-retailer supply chain system
This paper explores the cooperative advertising problem by considering the situation where a manufacturer sells its product through two competing retailers facing Newsvendor problem.The effect of brand name investment and local advertising expenditures on each retailer's demand,and the influence of competition between the retailers on each member's optimal advertising policy are analyzed.The optimal brand name investment of the manufacturer,the optimal local advertising expenditures,and the optimal order quantity of two competing retailers under decentralized and centralized decision-making are given,respectively.Finally, a profit-sharing contract to coordinate the supply chain is presented,and how to share the supply chain's increased profit among the supply chain members is discussed from the angle of risk preference.