Pricing and replenishment policies in dual-channel supply chain under continuous unit cost decrease

Many companies are implementing trade-in programmes through multiple channels. This may ultimately lead to fiercer channel conflict and competition. Few studies have explored firms’ optimal trade-in policies in such an environment. To fill the gap, we build a theoretical model that captures the features of a dual-channel situation in which a manufacturer implements a trade-in programme through retail and direct channels simultaneously. Compared with the case in which there is no trade-in rebate, the results show that a trade-in programme can intensify or mitigate the double marginalisation effect if the retailer can initially decide the trade-in rebate in the retail channel. This significantly relies on market segmentation. However, when the retailer cannot decide the trade-in rebate in the retail channel, the trade-in programme aggravates the double marginalisation effect. Second, the trade-in rebate offered by the retailer may be higher than the subsidy offered by the manufacturer, as long as the retailer can autonomously decide the trade-in rebate in the retail channel. Furthermore, we find that both the manufacturer and retailer prefer to obtain the right to autonomously decide the trade-in rebate in the retail channel, but the supply chain prefers that the manufacturer do it. Some numerical examples are provided to further explain these outcomes.

This paper examines the dual-channel supply chain in which the differentiation of the environmental sustainability of channels is considered. We analyze the influences of the level of environmental sustainability of channels on the pricing policies for the supply chain members in both centralized and decentralized models using the Stackelberg game model under inconsistent price policy. We obtain the optimal level of environmental sustainability of channels and pricing decisions for the players in the centralized and decentralized dual-channel supply chains. Results show that the influence mechanisms of the level of environmental sustainability of channels on the pricing decisions are different in the centralized and decentralized models. Furthermore, numerical analysis has been conducted to investigate the effects of the cross-environmental-sustainability sensitivity factor and the initial proportion of consumers who prefer the retail channel on the level of environmental sustainability of channels, pricing policies and players’ profits.

Optimal peak load pricing with time-additive consumer preferences

Pricing and production decisions in a dual-channel supply chain when production costs are disrupted

Wait Time Based Pricing for Queues with Customer-Chosen Service Times

It is common for a firm to make use of multiple suppliers of different delivery lead times, reliabilities, and costs. In this study, we are concerned with the joint pricing and inventory control problem for such a firm that has a quick‐response supplier and a regular supplier that both suffer random disruptions, and faces price‐sensitive random demands. We aim at characterizing the optimal ordering and pricing policies in each period over a planning horizon, and analyzing the impacts of supply source diversification. We show that, when both suppliers are unreliable, the optimal inventory policy in each period is a reorder point policy and the optimal price is decreasing in the starting inventory level in that period. In addition, we show that having supply source diversification or higher supplier reliability increases the firm's optimal profit and lowers the optimal selling price. We also demonstrate that, with the selling price as a decision, a supplier may receive even more orders from the firm after an additional supplier is introduced. For the special case where the quick‐response supplier is perfectly reliable, we further show that the optimal inventory policy is of a base‐stock type and the optimal pricing policy is a list‐price policy with markdowns.

This paper studies the pricing and service effect of a product in a dual-channel supply chain with one manufacturer and one retailer. A single-channel, retailer's dual-channels and manufacturer's dual-channels supply chain models are established, respectively. The decision problems of optimal pricing and service under different channels are analyzed. The results indicate that the retailer's offline channel service level will be improved when it also has an online channel, while the retailer's offline channel service level will be reduced when the manufacturer creates an online channel, if the competitiveness between the online and offline channel is the same, under the condition of low service sensitivity. Besides, the offline retail channel service level will be reduced whether the retailer or the manufacturer create an online channel, under the condition of high service sensitivity. Finally, we coordinate the two dual-channel models with quantity discount contract.

Channel Differentiation in a Dual-Channel Supply Chain

In this paper, an economic production quantity model in a three levels supply chain including multiple non-competing suppliers, single manufacturer and multiple non-competing retailers for multiple products with rework process under integrated and non-integrated structures is developed. In this chain, suppliers ship raw material to the manufacturer and the manufacturer combines the fixed percentage of different kinds of raw material to produce the finished products and then delivers them to the retailers. The Stackelberg game is established among the members of the chain. Optimizing the total profit of the chain under both structures applying the optimal pricing, inventory and production policies is the purpose of the research. Eventually, a numerical example is presented for comparing the total profit of the integrated and non-integrated chains of proposed model and some sensitivity analyses are performed to study the effects of parameter changes on the decision variables and the chain profit.

We study a joint implementation of price‐ and availability‐based product substitution to better match demand and constrained supply across vertically differentiated products. Our study is motivated by firms that utilize dynamic pricing as well as customer upgrades, as ex ante and ex post mechanisms, respectively, to mitigate inventory mismatches. To gain insight into how offering product upgrades impacts optimal price selection, we formulate a multiple period, nested two‐stage model where the firm first sets prices and replenishment levels for each product while the demand is still uncertain, and after observing the demand, decides how many (if any) of the customers to upgrade to a higher quality product. We characterize the structure of the optimal upgrade, pricing and replenishment policies and find that firms having greater flexibility to offer product upgrades can restrain their reliance on dynamic pricing, enabling them to better protect the price differentiation between the products. We also show how the quality differential between the products or changes in the replenishment cost structures influence the optimal policy. Using insights gained from the optimal policy structure, we construct a heuristic policy and find that it performs well across various parameter values. Finally, we consider an extension in which the firm dynamically sets upgrade fees in each period. Our results overall help further our understanding of the intricate relationship among a firm's decisions on pricing, replenishment, and product upgrades in an effort to better match demand and constrained supply.

This study develops an optimal pricing and replenishment policy in an arborescent (tree-like) supply chain system. Since it benefits the up-streams more than the down-streams when a producer, a distributor and multiple retailers are integrated, a pricing strategy with price reduction is derived to entice the down-streams to accept the incentive system with minimum total cost. Negotiation factors are incorporated to balance the cost saving between the players. A numerical example solved by GA (genetic algorithm) is provided to illustrate the theory and the problem-solving tool. The result shows that the percentage of total cost reduction incurred from the integration is quite impressive.

Optimal pricing and inventory strategies for fashion products under time-dependent interest rate and demand

The Journal of FinanceVolume 41, Issue 5 p. 1141-1148 Note A Note on Optimal Credit and Pricing Policy under Uncertainty: A Contingent-Claims Approach CHUN H. LAM, CHUN H. LAMSearch for more papers by this authorANDREW H. CHEN, ANDREW H. CHEN Both authors from Edwin L. Cox School of Business, Southern Methodist University. We are indebted to the comments and suggestions of Chris Barry, Sam Dennis, and two anonymous referees on earlier versions of the paper. The authors also acknowledge the financial support from the Center for the Study of Financial Institutions and Markets at Southern Methodist University.Search for more papers by this author CHUN H. LAM, CHUN H. LAMSearch for more papers by this authorANDREW H. CHEN, ANDREW H. CHEN Both authors from Edwin L. Cox School of Business, Southern Methodist University. We are indebted to the comments and suggestions of Chris Barry, Sam Dennis, and two anonymous referees on earlier versions of the paper. The authors also acknowledge the financial support from the Center for the Study of Financial Institutions and Markets at Southern Methodist University.Search for more papers by this author First published: December 1986 https://doi.org/10.1111/j.1540-6261.1986.tb02536.xCitations: 3 Read the full textAboutPDF ToolsRequest permissionExport citationAdd to favoritesTrack citation ShareShare Give accessShare full text accessShare full-text accessPlease review our Terms and Conditions of Use and check box below to share full-text version of article.I have read and accept the Wiley Online Library Terms and Conditions of UseShareable LinkUse the link below to share a full-text version of this article with your friends and colleagues. Learn more.Copy URL Share a linkShare onFacebookTwitterLinkedInRedditWechat Citing Literature Volume41, Issue5December 1986Pages 1141-1148 RelatedInformation

The retailer cannot often identify consumers’ preference for personalized and refined services. This poses a lower service than the consumer expects, which will lead to a decline in consumers’ satisfaction and loyalty. To cope with this problem, we consider a dual-channel supply chain composed of a manufacturer who has the online channel and an offline retailer and introduce the concept of underservice into the framework of pricing and service decision. The influence of consumers’ service expectations and the sensitive coefficient of consumers’ perceptive service on optimal decision-making were explored by optimization theory. First, the mathematical model of profit functions of the offline retailer and the manufacturer was developed by taking into account the service expectation respectively. Based on this, the Stackelberg game was adopted to prove that there is a linkage mechanism between the optimal retail price and the optimal service level under certain conditions. Second, we examined the conditions under which underservice occurs and the factors that influence them. Finally, we explored the stability condition under which the offline retailer’s optimal service level is against pricing. Results show that for newly launched products, the offline retailer will take the risk of increased service costs to adopt a strategy of high profit and good sales as a result of underservice. With regard to expiring products, it is impossible for the offline retailer to provide a lower-than-expected service level. Therefore, the offline retailer will adopt a strategy of small profits but quick turnover. In addition, the optimal service level of the offline retailer is stable against the optimal retail price, which greatly simplifies the service decision of the offline retailer, that is, the offline retailer does not need to consider the pricing strategy of the manufacturer and only needs to offer a level of service equal to the consumers’ service expectation.

This paper studies the pricing strategies in centralized and decentralized dual-channel supply chains. It first discusses that production cost and demand disruptions are highly correlated, and they influence the pricing and production decisions. Therefore, both disruptions should be considered simultaneously. A game-theoretical method is proposed to drive optimal wholesale and retail price for manufacture and retailer under these disruptions. Then, it is shown that the optimal prices are affected by sharing demand for the direct channel in both centralized and decentralized problems. Moreover, this paper models the dual-channel supply chains with production cost and demand disruptions in two structures, disruptions increasing/decreasing the demand. The models are then solved using the KKT conditions. Finally, a numerical example is presented to show total profit of supply chain for each structure.