Pricing Decisions of a Dual-Channel Supply Chain considering Supply Disruption Risk

Abstract

Supply disruption may cause strong complaints of customers, which is a cost loss for the firms in the supply chain. Obviously, if realizing that there is the disruption risk, the members in a supply chain will adjust their decisions. For analyzing the influence, we consider a popular supply chain mode with dual channels, where one manufacturer has its direct sales channel and one traditional retailer channel. The manufacturer may suffer a supply disruption so that all ordered products by the retailer or the direct retail channel will be lost, and the members in supply chain will bear the corresponding disruption penalty from the customers. By considering four structures with different market power relations, the closed-form optimal price decisions of the four models are given. We found that the disruption factor improves the sales prices for any member structure as compared to the supply chain without the disruption. And the direct retail prices in the different modes are the same as each other, but the price of the traditional channel is influenced by the market share. And the sorts of the sales prices under different structures are given. We also conduct some extensive numerical analysis and compare the results under different structures. We observe that the expected optimal profits of considering the external penalty are smaller than those of no external penalty, and we give a sort of the optimal expected profits. And we also provide the effects of some parameters on the optimal decisions and the optimal expected profits.

An Efficient Approach for Coordination of Dual-Channel Closed-Loop Supply Chain Management

“…In response to issues, such as how to alleviate channel conflicts and the coordination of closed-loop supply chains, Huang et al [19], based on the dual-channel sales and dual-channel recycling model of the closed-loop supply chains, considered the sale and recycling channels under conflict through an improved two department's fee-based contract that realizes the coordinated optimization of the dual-channel closed-loop supply Sustainability 2018, 10, 3433 4 of 20 chain. On this basis, Zhou et al [20] considered manufacturers and retailers when the business is the leader of the game and the pricing of the decision-maker under two different market forces.…”

“…Furthermore, the optimal profits of offline retailers, online retailers, and manufacturers are [16][17][18][19][20]22]:…”

“…In order to solve the above problems, it is necessary to directly recycle the dual-channel closed-loop supply chain under the third-party recycling model. The fair concern of the seller is the establishment of a suitable contract to achieve closure optimization of the ring supply chain to achieve Pareto optimality.The existing research [5][6][7][8][9][10][11][12][13][14][15][16][17][18][19][20] does not consider the horizontal fairness between retailers of the dual-channel closed-loop supply chain, which will lead to an inadequate understanding of pricing issues.The main contribution of this paper is to provide a comprehensive and innovative performance framework to compare the direct and third-party recovery mode in a dual-channel supply-chain management system. This study provides the performance comparison of supply chain members between two different dual-channel supply chain structures.…”

“…The existing research [5][6][7][8][9][10][11][12][13][14][15][16][17][18][19][20] does not consider the horizontal fairness between retailers of the dual-channel closed-loop supply chain, which will lead to an inadequate understanding of pricing issues.…”

The Entropy Complexity of an Asymmetric Dual-Channel Supply Chain with Probabilistic Selling

“…Li et al [21] developed and discussed a Stackelberg game model of a supply chain considering customer returns and pricing strategies. Zhou et al [22] studied the influence of supply disruption risk on sales prices under the direct retailer channel and traditional retailer channel. When the dual channel supply chain uses differential and non-differential pricing scenarios, respectively, Zhou et al [23] investigated how free riding affected the pricing or service strategies and profits of the manufacturer and traditional retailer.…”