Research of supply chain cooperation with retailer competition

In this paper, we confine ourselves to two-echelon supply chains with a single supplier servicing a network of competing retailers. The supplier distributes closely substitutable products to a set of competing firms that in turn sell these to the consumers. The major challenge for these chairs is to optimize their aggregate performance while maintaining decentralized decision making. The challenge for the supply chain therefore consists of creating an appropriate coordination mechanism to structure the cost and rewards of all its members so as to align their individual objective with the aggregate system-wide objective. The aim of this paper is to design and implement an appropriate coordination mechanism which can be used to substantiate the close relationships between the supplier, manufacturers, transporters, distributors and customers based on the game theory.