A Model for R&D Investment, Operational Decision-Making and Cooperative Contracts of a Supply Chain in Complex Product Systems: Game Theoretic Approach

Despite the fact that many researches have been conducted regarding cooperation in the supply chain; But research shows that collaborations in chains with asymmetric power structures, which lead to investment in research and development, have received less attention. This article deals with the development of a model for the supply chain of a complex product, which, in addition to operational decisions to supply the product to the market, also makes decisions regarding investment in research and development. Answering these questions by considering the different power structure in the supply chain and paying attention to cost sharing and revenue sharing contracts is one of the goals of this article: (1) determining the balance point between the amount of investment in research and development, product price and production amount (2) Investigating the impact of research and development uncertainty, buyer fairness and customer sensitivity to product technology level on supply chain performance

The risk of uncertainty in the output of the research and development process and the demand function dependent on the level of product technology are considered in the model. The model is developed under the asymmetric structure of power in the chain by considering various cooperation contracts including research and development cost sharing, production cost sharing, and revenue sharing. Each of the scenarios of this problem is presented as a non-linear two-level programming model. The two-level mathematical model was created with the Nash bargaining game approach and the simulation method was used in its optimization.

This research shows that the risk of uncertainty reduces the profit of the supply chain, but the provided cooperation contracts can improve the performance of the chain compared to the decentralized structure. It was also found that the revenue sharing contract can generate more profit for both the entire supply chain and the supplier. But from the point of view of the buyer and based on the bargaining power, when his bargaining power is relatively low, R&D cost sharing and production cost sharing contracts are more beneficial. Also, increasing the fairness of the buyer will improve the performance of the entire supply chain in the structures of revenue sharing and research and development cost sharing. It has also been shown that the market's sensitivity to the level of product technology improves the performance of the chain in the structure of production cost sharing contracts and research and development costs. But in the revenue sharing structure, all members of the chain may not benefit from the market's sensitivity to the level of product technology. In addition, the market's sensitivity to the price and the fairness of the buyer, respectively, always cause a decrease and an increase in the performance of the supply chain.

Due to the significant costs of research and development and production in complex products, paying attention to these costs in supply chain cooperation contracts and sharing them between the influential factors in the supply chain can lead to an increase in the performance of the supply chain. The bargaining power between the buyer and the seller in this type of chain can affect the type of contract. Considering the unknown nature of information for the supply chain parties, more models can be developed.