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A survey of Stackelberg differential game models in supply and marketing channels

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An Erratum to this article was published on 21 June 2008

Abstract

Stackelberg differential game models have been used to study sequential decision making in noncooperative games in diverse fields. In this paper, we survey recent applications of Stackelberg differential game models to the supply chain management and marketing channels literatures. A common feature of these applications is the specification of the game structure: a decentralized channel composed of a manufacturer and independent retailers, and a sequential decision procedure with demand and supply dynamics and coordination issues. In supply chain management, Stackelberg differential games have been used to investigate inventory issues, wholesale and retail pricing strategies, and outsourcing in dynamic environments. The underlying demand typically has growth dynamics or seasonal variation. In marketing, Stackelberg differential games have been used to model cooperative advertising programs, store brand and national brand advertising strategies, shelf space allocation, and pricing and advertising decisions. The demand dynamics are usually extensions of the classical advertising capital models or sales-advertising response models. We begin by explaining the Stackelberg differential game solution methodology and then provide a description of the models and results reported in the literature.

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Authors and Affiliations

  1. School of Management, The University of Texas at Dallas, Richardson, TX, 75080, USA

    Xiuli He, Ashutosh Prasad & Suresh P. Sethi

  2. McCombs School of Business, The University of Texas at Austin, Austin, TX, 78731, USA

    Genaro J. Gutierrez

Authors
  1. Xiuli He
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  2. Ashutosh Prasad
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  3. Suresh P. Sethi
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  4. Genaro J. Gutierrez
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Corresponding author

Correspondence to Suresh P. Sethi.

Additional information

Ashutosh Prasad is an Associate Professor of Marketing at UT Dallas. He holds a PhD in Marketing and MS in Economics from UT Austin, MBA from IIM Calcutta and B.Tech in Electrical Engineering from ITBHU Varanasi. His dissertation essay, “Advertising vs. Pay-Per-View in Electronic Media,” won the 2003 IJRM Best Paper award. His research interests are in pricing and advertising strategies, the economics of information, and software marketing. He also actively researches salesforce management issues such as compensation design, internal marketing, training and motivation. His work has appeared, or is forthcoming, in journals such as Marketing Science, Management Science, Journal of Business, IJRM and Experimental Economics. Professor Prasad has taught Marketing Management, Pricing, Marketing Research and Marketing Models to MBA students, and Pricing and special topics seminars to PhD students. He received the 2002 Outstanding Undergraduate Teacher award. He has served as a reviewer for all the leading marketing journals.

Suresh P. Sethi is Charles & Nancy Davidson Distinguished Professor of Operations Management and Director of the Center for Intelligent Supply Networks in the School of Management at The University of Texas at Dallas, Richardson, TX. He earned his Ph.D. in Operations Research from Carnegie Mellon University in 1972. He has written 5 books and published more than 300 research papers in the fields of manufacturing and operations management, finance and economics, marketing, and optimization theory. He serves on the editorial board of such journals as Journal on Decision and Risk Analysis and Automatica. He is a Departmental Editor of Production and Operations Management. Recent honors include: POMS Fellow (2005), INFORMS Fellow (2003), AAAS Fellow (2003), IEEE Fellow (2001). Two conferences were organized and two books edited in his honor in 2005-6. He is a member of AAAS, CORS, DSI, INFORMS, IIE, ORSI, POMS, SIAM, and IEEE.

Genaro J. Gutierrez is an Associate Professor of Management at the McCombs School of Business, The University of Texas at Austin, where he teaches operations management and management of projects. He is the Director of the McCombs School of Business Executive MBA Program in Mexico City, and he has served as advisor to the Economic Deregulation Unit of the Mexican Commerce and Industry Secretariat in 1995–96.

His current research interests include the incorporation of commodity exchanges in supply chain procurement, and the study of distribution channels. Recent publications of Dr. Gutierrez have appeared in Management Science, Operations Research, IIE Transactions, and The European Journal of Operations Research.

Professor Gutierrez earned his M.Sc. and Ph.D. degrees in Industrial Engineering from Stanford University. He also received the degree of Ingeniero Industrial y de Systemas from ITESM in Monterrey, Mexico.

An erratum to this article can be found online at http://dx.doi.org/10.1007/s11518-008-5082-x.

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He, X., Prasad, A., Sethi, S.P. et al. A survey of Stackelberg differential game models in supply and marketing channels. J. Syst. Sci. Syst. Eng. 16, 385–413 (2007). https://doi.org/10.1007/s11518-007-5058-2

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