W e analyz: a scenari.o. wher~ a manufa~t~rer with a traditional channel partner opens up a direct channel In competition WIth the tradItional channel. We first consider that in order to mitigate channel conflict the manufacturer, who chooses wholesale prices as a Stackelberg leader, commits to setting a direct channel retail price that matches the retailer's price in the traditional channel. We find that the specific equal-pricing strategy that optimizes profits for the manufacturer is also preferred by the retailer and customers over other equal-pricing strategies. We next consider the implications of the equal-pricing constraint through a numerical experiment that indicates that the equal-pricing strategy is appropriate as long as the Internet channel is significantly less convenient than the traditional channel. If the Internet channel is of comparable convenience to the traditional channel, then the manufacturer has tremendous incentive to abandon the equal-pricing policy, at great peril to the traditional retailer.

No abstract

This paper investigates inventory-rationing policies of interest to firms operating in a direct market channel. We model a single product with two demand classes, where one class requests a lower order fulfillment lead time but pays a higher price. Demand for each class follows a Poisson process. Inventory is fed by a production system with exponentially distributed build times. We study rationing policies in which the firm either blocks or backlogs orders for the lower priority customers when inventory drops below a certain level. We compare the performance of these rationing policies with a pure first-come, first-serve policy under various scenarios for customer response to delay: lost sales, backlog, and a combination of lost sales and backlog. (DIRECT MARKET CHANNELS; SUPPLY CHAIN MANAGEMENT; MARKOV PROCESSES/ CHAINS; STOCHASTIC INVENTORY RATIONING MODELS)

No abstract

No abstract