Strategic Inventory Management with Private Brands: Navigating the Challenges of Supply Uncertainty

In the context of globalized and complex supply chains, supply uncertainty occurs frequently. To reduce dependence on suppliers, retailers often consider holding strategic inventory and introducing private brands. To explore the relationship between private brands and strategic inventory strategies, and to determine the optimal strategic decisions, this paper constructs a two-stage supply chain model. Using game theory methods, we calculate the equilibrium outcomes of the supply chain under two scenarios: one with only national brands and the other with the introduction of private brands. The main findings are as follows. First, we identify the optimal decisions for both suppliers and retailers in each scenario. The influencing factors include perceived quality, inventory costs, and supply stability. Second, we find that there are constraints for retailers to activate strategic inventory, but these constraints are less restrictive when private brands are introduced. Finally, introducing private brands benefits retailers in implementing strategic inventory, although the extent of this impact depends on the conditions under which the strategic stockpile is implemented. These findings fill the gap in the existing literature on the impact of private brand introductions on strategic inventory under supply uncertainty and highlight valuable implications for business decision-makers.