Pricing Decision for Two Differentiated Products

The traditional newsvendor problems is extended to a more realistic structural features: market demand that is sensitive to the selling prices of two differentiated products, direct competition in the marketplace, and multi-echelon interaction. Detailedly, one manufacturer who produces two differentiated products, and sells the two products to two different competitive retailers, and the two retailers then sell the two products to end consumer where consumer demand for each product is stochastic. Using game-theoretical approach, in the Manufacturer Stackelberg game case, the decisions on the retail prices and order quantities of two products for the two different retailers and the decisions on the wholesales prices of two products for the manufacturer are explored.