Research on the Pricing Strategy of Production Wastes for Supply Limitation Considerations

The pricing of production wastes is one of the key problems to realize the coordination operation of interrelated supply chains. Considering the background that the first cooperation between wastes supplier and manufacturer and the capacity of production wastes is supposed to be limited since the output of production wastes is dependent on the market demand of main production. Based on Nash bargaining game, the pricing strategy of production wastes under the condition of limited capacity is proposed to realize the optimal interrelated supply chain system. The effects of output capacity on price and total utility of the system are discussed. Furthermore, the pricing strategy of incentive compatibility when output capacity is less than the order quantity of the contract is proposed.