Coordination of incentive conflict based on Grey‐Stackelberg model under the main manufacturers‐suppliers model

Abstract

Purpose

The purpose of this paper is to find an incentive strategy to enhance the interests of the main manufacturer by inducing the suppliers to conflict the fixed incentive provided by the main manufacturer.

Design/methodology/approach

The main manufacturer‐supplier model is widely applied in the R&D procedure of complex products such as aeroplanes. Because of the uncertainty in the R&D, the effort of the suppliers has an important effect on it. Considering the dynamic interaction between the main manufacturers and suppliers, with the main manufacturers as leaders and suppliers as followers, this paper establishes a Grey‐Stackelberg model to analyze the best change of the incentive strategies of the main manufacturers and the effort strategies under incentive‐conflict of suppliers under the uncertain environment. A numeric example is also computed in the last part of the paper.

Findings

The results show that the main manufacturer can increase its benefit without damaging the interests of suppliers by controlling the fixed incentives.

Originality/value

The paper succeeds in establishing the Grey‐Stackelberg model by analysing the grey area among the main manufacturer and the suppliers, and helps to develop grey systems theory.

Citation

Lifang, H. and Hongzhuan, C. (2012), "Coordination of incentive conflict based on Grey‐Stackelberg model under the main manufacturers‐suppliers model", Grey Systems: Theory and Application, Vol. 2 No. 2, pp. 240-248. https://doi.org/10.1108/20439371211260207