This paper focuses on pricing and vertical cooperative advertising decisions in a two-tier supply chain. Using a Stackelberg game model where the manufacturer acts as the game leader and the retailer acts as the game follower, we obtain closed-form equilibrium solution and explicitly show how pricing and advertising decisions are made. When market demand decreases exponentially with respect to the retail price and increases with respect to national and local advertising expenditures in an additive way, the manufacturer benefits from providing percentage reimbursement for the retailer’s local advertising expenditure when demand price elasticity is large enough. Whether the manufacturer benefits from cooperative advertising is also closely related to supply chain member’s relative advertising efficiency. In the decision for adopting coop advertising strategy, it is critical for the manufacturer to identify how market demand depends on national and local advertisements. The findings from this research can enhance our understanding of cooperative advertising decisions in a two-tier supply chain with price-dependent demand.

The total variation (TV) model is attractive in that it is able to preserve sharp attributes in images. However, the restored images from TV-based methods do not usually stay in a given dynamic range, and hence projection is required to bring them back into the dynamic range for visual presentation or for storage in digital media. This will affect the accuracy of the restoration as the projected image will no longer be the minimizer of the given TV model. In this paper, we show that one can get much more accurate solutions by imposing box constraints on the TV models and solving the resulting constrained models. Our numerical results show that for some images where there are many pixels with values lying on the boundary of the dynamic range, the gain can be as great as 10.28 decibel in the peak signal-to-noise ratio. One traditional hindrance using the constrained model is that it is difficult to solve. However, in this paper, we propose using the alternating direction method of multipliers (ADMM) to solve the constrained models. This leads to a fast and convergent algorithm that is applicable for both Gaussian and impulse noise. Numerical results show that our ADMM algorithm is better than some state-of-the-art algorithms for unconstrained models in terms of both accuracy and robustness with respect to the regularization parameter.

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