Service supply chain coordination with platform effort-induced demand

Abstract

In this study we investigate the effort of a service platform in cooperation with a hotel and its influence on the hotel's decision about the quantity of reserved rooms. We begin with a newsvendor hotel facing two kinds of customers: D-customers and C-customers. The D-customers order rooms from the hotel's front desk while the C-customers book rooms through a service platform, i.e., Ctrip.com. The hotel makes decisions about how many rooms to allot to Ctrip.com to achieve optimal profit. Two newsvendor settings are proposed that depict the demands of the two parties independently. We discuss a fixed payment contract and a cost sharing contract and find that the cost sharing contract achieves channel coordination and that the division of profit depends upon the hotel's payment to Ctrip.com. We then extend our study by taking into consideration the effort Ctrip.com exerts. We verify that a cost sharing contract can achieve channel coordination imperfectly if the idle cost of a vacant reserved room is shared between the hotel and Ctrip.com. Further, given that the cost of effort is shared, the channel is coordinated and a win-win is guaranteed as well if the terms of the new cost sharing contract are properly chosen.

Vendor Management Inventory with consignment contracts and the benefits of cooperative advertising

“…Zhang et al (2013) model a supply chain in which a retailer invests in a preservation technology e¤ort and a manufacturer proposes a cooperative program to improve the economic outcomes of all …rms. In the context of service operations, Zha et al (2015) characterize the case in which …rms share the cost when capacity allocation is ine¢ cient. They show the conditions under which a cooperative program leads to coordination (Zha et al, 2015).…”

“…In the context of service operations, Zha et al (2015) characterize the case in which …rms share the cost when capacity allocation is ine¢ cient. They show the conditions under which a cooperative program leads to coordination (Zha et al, 2015). Cho and Gerchak (2005) compare traditional coordination schemes such as wholesale price and a revenue-sharing contract to a cooperative advertising program based on operating costs.…”

Pricing and bargaining strategy of e-retail under hybrid operational patterns

“…Using network and new information technologies, e-platforms create an internet-based mode of contact between the manufacturer and its consumers, opening up an extensive customer base, enormous purchasing information and databases (Zha et al 2015). A recent study has shown the possibility of using Twitter data for supply chain research (Chae 2015).…”

Winner-Takes-All or Co-Evolution among Platform Ecosystems: A Look at the Competitive and Symbiotic Actions of Complementors

“…Service intermediation platforms do not have a hardware-software structure. Several studies have focused on service intermediation platforms, such as online travel agents [74], hotel reservation services [75], taxi-hiring services [76], and grocery-delivery services in the sharing economy [77]. These platforms usually act as an intermediary between existing services rather than develop new services.…”