Journal of Quality Engineering and Management

Abstract Emphasizing the importance of competition and cooperation in supply chains caused a resurgence of game theory ‎as a tool for the analysis of interactions in a supply chain. The development of the business and the ‎complexity of retailing requires a change in the advertising approaches. Affiliate advertising is one of the ways that ‎manufacturers and distributors can jointly participate in advertising programs. Therefore, a variable is defined as ‎the participation rate, which is a percentage of local advertising costs that the producer agrees to pay. In this ‎research, we consider cooperation in advertising during two different advertising function models along with pricing ‎decisions, warranty period and quality level, in a two-level supply chain. Therefore, demand will be affected by ‎price, advertising, warranty period and quality level. Manufacturer and retailer can have cooperative advertising. ‎The theory of non-cooperative and cooperative games is the tool used to solve this problem. Due to the complexity ‎of the model, a meta-heuristic algorithm, the optics inspired optimization, which is a population-based search ‎algorithm, is used to solve the problem. In this research, it was observed that the sum of the profits claimed by both ‎parties in the non-cooperative game is smaller than the profit of the whole system in the cooperative game, and the ‎profit of each individual is also lower in the non-cooperative state than in the cooperative state. Therefore, ‎cooperation between two players increases their profits. Also, sensitivity analysis has been done on some ‎parameters, including parameters related to product quality.‎