Competitive inventory models under demand substitution

This work deals with the equilibrium strategies for substitutable product inventory control systems between two retailers in a finite horizon, two and single period cases. We investigate how a dynamic game framework can be used to develop various demand scenarios in a duopoly setting. We also analyze the equilibrium behavior of decentralized supply chains with competing retailers who are treated as independent agents under an effective demand uncertainty. The agents deal with a single product, they are interested in maximizing their own profits, they do not share a common inventory at retail outlets and finally the excess demand is lost. There is nopricing and the competition of the game is the ordering quantities. In this thesis, we generally make finite horizon analyses including a single period result in a Stackelberg game. First, we provide a strategy applicable in a competitive environment. We show the uniqueness of the optimality while parties gave orders at the same time with a condition on the upper bound on the total number of ordering units in a finite horizon case. Furthermore, we show the existence of the optimality in a two-period model with a more general total demand which depends on two random variables. Lastly, we investigate the uniqueness of the Nash equilibirum in a single period model with a customer satisfaction measure. In addition to this, the optimality of the Stackelberg equilibrium is shown with the same customer satisfaction setting.