Impacts of inspection errors and warranty costs on a complex product supply chain under different development modes

With the increasing competition in the complex product industry, discussions regarding quality and price decision-making within the supply chain have become widespread. Nevertheless, as product development modes evolve, the influence of inspection errors and warranty costs on a complex product supply chain has received limited attention. In this paper, we apply a nonlinear demand function and develop game models to depict the quality and price decision problem in a complex product supply chain. We derive equilibrium decisions under two distinct product development modes, the traditional mode and the customized mode, with detailed analyses. Furthermore, numerical studies are conducted to illustrate how equilibrium decisions fluctuate in response to inspection errors, warranty costs and uncertain demand, yielding interesting findings. We also explore the impact of information asymmetry. Ultimately, significant insights and implications are put forward.