Game-theoretic modeling of product quality and consumer awareness in stochastic supply chains: additive versus traditional manufacturing

Abstract

Purpose The purpose of this study is to investigate the integration of additive manufacturing (AM) with traditional manufacturing (TM) in supply chains (SCNs), aiming to meet diverse customer needs, optimize production time and cost and enhance competitiveness in uncertain market environments. Design/methodology/approach The authors develop a game-theoretic SCN model under uncertainty, focusing on two substitute products – one produced through TM and the other through AM. Customer demand depends on product quality and sales effort. They analyze centralized and decentralized decision-making across three scenarios: (1) production through TM only, (2) production through AM only, and (3) production through both TM and AM. The model is validated through numerical examples, and sensitivity analysis is conducted to examine the effects of key parameters on SCN profit. Findings Results show that integrating AM with TM enhances operational efficiency and overall SCN profitability. While AM reduces unit production cost compared to TM, its installation cost may reduce profitability if it exceeds a critical threshold. Improved product quality and increased sales effort significantly boost profits, and accounting for demand uncertainty enables better alignment with customer preferences, leading to mutual gains for SCN members. Originality/value This research is among the first to examine SCN decision-making by combining AM and TM under demand uncertainty using a game-theoretic framework. It offers theoretical insights into the conditions under which AM adoption is profitable and provides practical guidance for managers seeking to balance investment in AM with traditional practices for improved competitiveness and sustainability.