Optimal Prices and Associated Factors of Product with Substitution for One Supplier and Multiple Retailers Supply Chain

This paper models the prices decision process of a one supplier and multiple retailers supply chain considering different product substitution degrees and retailer amount. Then we analyze the optimal prices for the supplier and the retailers, as well as their influencing factors under both decentralized and centralized decision-making process. The results indicate that: For the wholesale price of raw materials under the decentralized mode, both of the rigid demand of retailing market and the retailer amount act positive effect while retailers’ sub-packaging cost acts negative one. For the retail prices of the products under both decentralized and centralized mode, the rigid demand and sub-packaging costs make positive effect. However, the sub-packaging costs of other competitors have negative effect on the retail price under decentralized mode but acts positive one under the centralized mode. This paper also reveals the uncertainty of the effect from the product substitution degree through numerical analysis. Finally, specific countermeasures for the government are provided according to the perspective of the analyzed factors in order to ensure the welfare of consumers and promote the development of the industry