Retailer Pricing and Procurement Strategies Considering Vertical Differentiation and Supply Disruption Risks

This paper analyzes the pricing and procurement decisions of retailers facing supply disruption risks with vertically differentiated products. Using a Stackelberg game model, it examines a low-quality, reliable supplier, a high-quality supplier with supply risks, and a rational retailer. Three procurement modes are considered: mixed, single high-quality, and single low-quality. The study explores how factors like supplier reliability, vertical differentiation, and added costs influence retailer pricing, quantity, and procurement strategies to maximize profits. The aim is to help retailers cope with supply risks while optimizing the entire supply chain.