Manufacturer selection and price negotiation for competitive wholesale distribution operations

This paper considers a new class of problems arising in the distribution si de of supply chains. It considers cooperative market expansion and price ne gotiation by wholesalers and manufacturers in a class of franchise-type dis tribution markets. For wholesalers, expanding the coverage of geographicall y dispersed markets while retaining profitability of business requires new levels of price discounts from manufacturers. Manufacturers, on the other h and, attempt to limit such discounts to maintain a resale price to retailer s. A successful negotiation results in a set of spatial markets with approp riate wholesale prices for each wholesaler A sequential method is proposed for this purpose, assuming that the manufacturers and wholesalers ave co-op erative and they exchange relevant information. The suggested process uses two optimisation models and is illustrated with a case study.