Three essays on pricing, quality, and advertising decisions while anticipating a product recall
type: CreativeWork
description: Product recalls have been rising significantly in both numbers and severity across various industries. The consequences of recalls can be substantial, leading to direct and indirect financial losses for the entire supply chain. Using a game theoretic modelling approach, this thesis examines pricing, quality, and advertising decisions to manage product recalls and mitigate associated risks and losses. The core chapters of the thesis consider three relevant topics on product recall management. In the second chapter, we analyze quality and pricing strategies for two competing firms facing the risk of a severe quality-related recall, which makes the product hazardous and leads to its removal from the market. We develop a two-stage Nash game where the probability of recall depends on the firms’ chosen quality investments, and either firm can experience a recall. Our results indicate that the competitor of the affected firm by the recall should lower its price after the recall if consumers’ price sensitivity changes enough and may increase or keep its price the same otherwise. Surprisingly, considering the risk of a recall does not always lead firms to enhance their product quality. The third chapter considers a monopoly supply chain wherein a manufacturer sells a product through a retailer while anticipating a moderate or minor product recall and subsequent recovery process. Developing a manufacturer-Stackelberg game-theoretic model, we investigate how cost-sharing and revenue-sharing contracts serve as a retailer’s strategies to encourage the manufacturer to enhance product quality, thereby preventing the potential product recall and its associated costs, while also boosting demand. Our results reveal that revenue sharing through bargaining stands out as the most effective contract in driving product quality, diminishing recall probability, and generating higher profits for the manufacturer and the whole supply chain. Nevertheless, the retailer favours typical revenue s…
abstract: Product recalls have been rising significantly in both numbers and severity across various industries. The consequences of recalls can be substantial, leading to direct and indirect financial losses for the entire supply chain. Using a game theoretic modelling approach, this thesis examines pricing, quality, and advertising decisions to manage product recalls and mitigate associated risks and losses. The core chapters of the thesis consider three relevant topics on product recall management. In the second chapter, we analyze quality and pricing strategies for two competing firms facing the risk of a severe quality-related recall, which makes the product hazardous and leads to its removal from the market. We develop a two-stage Nash game where the probability of recall depends on the firms’ chosen quality investments, and either firm can experience a recall. Our results indicate that the competitor of the affected firm by the recall should lower its price after the recall if consumers’ price sensitivity changes enough and may increase or keep its price the same otherwise. Surprisingly, considering the risk of a recall does not always lead firms to enhance their product quality. The third chapter considers a monopoly supply chain wherein a manufacturer sells a product through a retailer while anticipating a moderate or minor product recall and subsequent recovery process. Developing a manufacturer-Stackelberg game-theoretic model, we investigate how cost-sharing and revenue-sharing contracts serve as a retailer’s strategies to encourage the manufacturer to enhance product quality, thereby preventing the potential product recall and its associated costs, while also boosting demand. Our results reveal that revenue sharing through bargaining stands out as the most effective contract in driving product quality, diminishing recall probability, and generating higher profits for the manufacturer and the whole supply chain. Nevertheless, the retailer favours typical revenue s…
author: Jafarzadeh Ghazi, Amirhossein
language: en
date published: 2024-08-01
date modified: 2026-07-24T05:35:36Z
provider: Ontario Institute of Technology
publisher: Networked Digital Library of Theses and Dissertations
type: WebPage
source organization: University of Ontario Institute of Technology

PropertyValue
property ID: Handle
value: https://hdl.handle.net/10155/1849