Campus Advisory Access the latest updates, FAQs, and resources for the Adelphi community on the global coronavirus pandemic. » COVID-19 Updates

Coronavirus Updates on Operations: Department or campus operations may be modified during this time. Please call or email the department for more information or visit



January 19, 2016

Retail Therapy

by Bonnie Eissner

How retailers and manufacturers can collaborate to boost profits

Think that supply chain modeling has little to do with your daily life? Think again. Supply chains are practically everywhere—from the toothpaste you buy at Costco or Walgreen’s to the car that you haggle over at the dealership.

In a traditional supply chain, manufacturers and retailers have competing interests. Manufacturers prefer high wholesale prices, while retailers prefer low ones. Such conflict can lead to price wars that undermine the profits of the two groups. Research by Susan Li, Ph.D., a professor at the Robert B. Willumstad School of Business, shows, by contrast, that cooperation between wholesalers and retailers can yield bigger profits for both.

Dr. Li has long applied her expertise in information systems and business modeling to understand how for-profit and not-for-profit organizations can optimize their efficiencies. In a recent study published in the Encyclopedia of Business Analytics and Optimization, Dr. Li and her collaborators used game theory to show how a manufacturer and a retailer can work together to create an advertising strategy and set a final product price and, in so doing, maximize their gains.

Dr. Li and her colleagues incorporated into their model a key factor: reference price. The reference price is the amount that consumers expect to pay for a good or service based on its assumed features and the prices of similar items or services.

“A firm can form a higher reference price in the minds of consumers via various marketing mixes, among which advertising and pricing are the most important ones,” Dr. Li and her co-authors wrote. “Generally, advertising that aims at building up brand awareness can form a higher reference price whereas a price discount leads to a lower one.”

According to Dr. Li and her colleagues, this conflict between advertising that raises the reference price and discount pricing that lowers it is rarely examined in scholarly papers. By considering the impact of reference price on the joint advertising and pricing strategy of a manufacturer and a retailer, Dr. Li and her collaborators offered a new framework for understanding how to create efficient and profitable supply chains.


This piece appeared in the 2015 issue of Erudition.


More Adelphi News

About Adelphi: A modern metropolitan university with a personalized approach to higher learning

Adelphi University, New York, is a highly awarded, nationally ranked, powerfully connected doctoral research university dedicated to transforming students’ lives through small classes with world-class faculty, hands-on learning and innovative ways to support academic and career success. Adelphi offers exceptional liberal arts and sciences programs and professional training, with particular strength in our Core Four—Arts and Humanities, STEM and Social Sciences, the Business and Education Professions, and Health and Wellness.

Recognized as a Best College by U.S. News & World Report, Adelphi is Long Island’s oldest private coeducational university. It serves almost 8,000 students at its beautiful main campus in Garden City, New York—just 23 miles from New York City’s cultural and internship opportunities—and at dynamic learning hubs in Manhattan, the Hudson Valley and Suffolk County, as well as online. 

More than 116,000 Adelphi graduates have gained the skills to thrive professionally as active, engaged citizens, making their mark on the University, their communities and the world.

For further information, please contact:

Todd Wilson
Strategic Communications Director 
p – 516.237.8634
e –