A Price Coordination Mechanism for Purchasing Supply Chain Based on Dynamic Game of Incomplete Information

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A Price Coordination Mechanism for Purchasing Supply Chain Based on Dynamic Game of Incomplete Information

Gao, Ai-Ying / Liu, Kai / Lei, Yi-Xue / Xu, Yong-Jie

As the intensifying of market competition and the refinement of social division, the operation of modern enterprises is increasingly dependent on supply chain management (SCM). With the extension of the supply chain (SC) in scope and scale, the purchasing management plays a vital role for SC operation. The traditional purchasing management lacks the coordination with upstream supplier and downstream customer. And, the related works concerning this issue are still very limited. To this end, this paper proposes a price coordination mechanism based on dynamic game of incomplete information (DGII). Starting from the expected profits of multiple node enterprises in the purchasing supply chain (PSC), this paper analyzes the whole SC composed of the purchaser, upstream supplier and downstream customer. We consider the demand of downstream customer and investigate the price coordination mechanism of the PSC. Then we study the game process of node enterprises in the PSC using DGII theory, and present mathematical analysis. Our proposal effectively solves the problem of traditional purchasing management in lacking of coordination, improves the purchasing management with the theoretical model, and riches the SC theory.