The Price Decision of Order With Third-Prty Logistics Based on Incomplete Information Game

Abstract

As the price is always a prime factor taken into consideration when a 3PL provides logistics service. With increasingly cases of logistics service providing to retailers rather than manufacturers nowadays, quantity may be not as an important factor. For retailers always have certain amounts of goods, they can hardly expand the scale at their will to obtain a quantity discount. To logistics companies, most of them are medium-sized and small enterprises, under limitations of its fields and capability. They can neither provide enough warehousing area for retailers. This paper builds the price decision model in expectation of utility obtaining by service contract instead of the whole revenueof pricemultiplying quantity, and would be more suitable for 3PL to apply when working for a retailer. Besides, this paper sets the opponent’s acceptable price as uncertain information, which is more realistic than the usual complete and perfect information assumption. Based on the incomplete information game and introducing variables of service capability and service level, this paper will give the best decision of pricing order and a specific amount in quotingthe price stage. Further discussion will quantify the benefits of pricing first and factors affect the benefits which aremore conducive to the third -party logisticsenterprises to provide services for external companies.