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Solve this problem using Game Theory: Consider a situation where two suppliers, Supplier X and Supplier Y, are vying for a long-term contract with
Solve this problem using Game Theory: Consider a situation where two suppliers, Supplier X and Supplier Y, are vying for a long-term contract with a manufacturing company to supply a critical component. The manufacturing company needs a reliable supplier to ensure the smooth production of its products. Both suppliers can choose either to offer a lower price (and potentially win the contract) or to offer a higher price (and avoid the risk of losing the contract). The manufacturing company, on the other hand, must decide whether to go for the lowest price or consider other factors such as reliability, quality, and long-term partnership. The profit structure (in millions of dollars) for the suppliers and the manufacturing company is as follows: If both suppliers offer a low price and the manufacturing company chooses one of them: Supplier X gets $8 million, Supplier Y gets $8 million, and the manufacturing company saves $4 million. If Supplier X offers a low price and Supplier Y offers a high price: Supplier X gets $10 million, Supplier Y gets $0, and the manufacturing company incurs a loss of $1 million. If Supplier X offers a high price and Supplier Y offers a low price: Supplier X gets $0, Supplier Y gets $10 million, and the manufacturing company incurs a loss of $1 million. If both suppliers offer a high price: Supplier X gets $2 million, Supplier Y gets $2 million, and the manufacturing company incurs a loss of $5 million.
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