Stackelberg game in a two-echelon supply chain involving service level and distributed controllable lead time

Abstract

This paper considers Stackelberg game decisions on the product and ordering policy in a two-echelon supply chain consisting of a manufacturer and a retailer. The manufacturer is the leader and provides a home delivery service, thus he controls the distributed lead time, which consists of three components: setup time, production time and shipping time. First, a Stackelberg game model and a benchmarking integrated model involving service level and lead time are established, then some properties of this model are deduced, and efficient algorithms which are based on these models' analyses are developed. Furthermore, a numerical example is presented to illustrate the models and the algorithm, and some comparisons with the existed model are also given. The comparative results show that both the retailer's and the system's profits are increased effectively in the case of service level concerned.