A study on manufacturer and suppliers for product innovation coordinating to avoid the risk based on game theory

Conditioned cooperative relationship is being encouraged in supply chain management now. Apart from the non-cooperative game theories and methods in analyzing the competitive aspect of the relationship, cooperative or coordinated game theory is also needed in studying the cooperative aspect of the relationship between the enterprises in the supply chain. So game theory and methods are used widely in the risk analysis to coordinate manufacturer and suppliers. The game model of partnership between the manufacturer and the supplier for product innovation is established, the paper is focused on a finitely repeated game process based on product innovation, with its strategies analyzed and explained by the finitely repeated game theory, and the choice is the game model of Nash equilibrium solution. Finally the conditions and the importance of setting up the supplier-manufacturer partnership are analysised.