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Competitive pricing and ordering decisions in a multiple-channel supply chain

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  • Hsieh, Chung-Chi
  • Chang, Yih-Long
  • Wu, Cheng-Han

Abstract

In this paper, we consider multiple manufacturers and a common retailer in a supply chain facing uncertain demand. Each manufacturer produces a different yet substitutable product sold through the common retailer, and a portion of the manufacturers sell their products through the direct channels in addition to the retail channel. We characterize the members׳ equilibrium decisions of prices and quantities under the decentralized uncoordinated and centralized integrated settings, and derive the closed-form solutions to explore the impact of channel structure and parameters on the members׳ decisions and performance. We further study a coordination mechanism for the members׳ pricing and ordering decisions when they operate under a decentralized setting. We show that when certain profit allocation conditions are met, the decentralized system will achieve the centralized integrated overall optimal profit and each chain member will get a better profit than with the decentralized uncoordinated system. Using numerical analyses, we derive many managerial insights with respect to supply chain system parameters and structure.

Suggested Citation

  • Hsieh, Chung-Chi & Chang, Yih-Long & Wu, Cheng-Han, 2014. "Competitive pricing and ordering decisions in a multiple-channel supply chain," International Journal of Production Economics, Elsevier, vol. 154(C), pages 156-165.
    • Handle: RePEc:eee:proeco:v:154:y:2014:i:c:p:156-165
    DOI: 10.1016/j.ijpe.2014.04.024
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    References listed on IDEAS

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    Cited by:

    1. Ciwei Dong & Liu Yang & Chi To Ng, 2020. "Quantity Leadership for a Dual-Channel Supply Chain with Retail Service," Asia-Pacific Journal of Operational Research (APJOR), World Scientific Publishing Co. Pte. Ltd., vol. 37(02), pages 1-32, March.
    2. Tian, Yi & Ma, Junhai & Xie, Lei & Koivumäki, Timo & Seppänen, Veikko, 2020. "Coordination and control of multi-channel supply chain driven by consumers’ channel preference and sales effort," Chaos, Solitons & Fractals, Elsevier, vol. 132(C).
    3. Guoxuan Huang & Qing Ding & Ciwei Dong & Zhicong Pan, 2021. "Joint optimization of pricing and inventory control for dual-channel problem under stochastic demand," Annals of Operations Research, Springer, vol. 298(1), pages 307-337, March.
    4. Hamed Jafari & Seyed Reza Hejazi & Morteza Rasti-Barzoki, 2016. "Pricing Decisions in Dual-Channel Supply Chain Including Monopolistic Manufacturer and Duopolistic Retailers: A Game-Theoretic Approach," Journal of Industry, Competition and Trade, Springer, vol. 16(3), pages 323-343, September.
    5. Niu, Baozhuang & Chen, Lei & Liu, Yaoqi & Jin, Yong, 2019. "Joint price and quality decisions considering Chinese customers' variety seeking behavior," International Journal of Production Economics, Elsevier, vol. 213(C), pages 97-107.
    6. Shuihua Han & Yufang Fu & Bin Cao & Zongwei Luo, 2018. "Pricing and bargaining strategy of e-retail under hybrid operational patterns," Annals of Operations Research, Springer, vol. 270(1), pages 179-200, November.
    7. Tahirov, Nail & Glock, Christoph H., 2022. "Manufacturer encroachment and channel conflicts: A systematic review of the literature," European Journal of Operational Research, Elsevier, vol. 302(2), pages 403-426.
    8. Ding, Qing & Dong, Ciwei & Pan, Zhicong, 2016. "A hierarchical pricing decision process on a dual-channel problem with one manufacturer and one retailer," International Journal of Production Economics, Elsevier, vol. 175(C), pages 197-212.
    9. Yan, Yingchen & Zhao, Ruiqing & Xing, Tiantian, 2019. "Strategic introduction of the marketplace channel under dual upstream disadvantages in sales efficiency and demand information," European Journal of Operational Research, Elsevier, vol. 273(3), pages 968-982.
    10. Yan, Yingchen & Zhao, Ruiqing & Liu, Zhibing, 2018. "Strategic introduction of the marketplace channel under spillovers from online to offline sales," European Journal of Operational Research, Elsevier, vol. 267(1), pages 65-77.
    11. Haodong Chen & Hengyi Zhang & Eias Al Humdan & Mohammed Alharithi & Yu Gong, 2023. "Research on Multi-Channel Supply Chain Decisions Considering Carbon Emission Cost and Consumer Loyalty," Sustainability, MDPI, vol. 15(14), pages 1-28, July.
    12. Li, Mengmeng & Mizuno, Shinji, 2022. "Comparison of dynamic and static pricing strategies in a dual-channel supply chain with inventory control," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 165(C).
    13. Hu, Benyong & Qu, Jiali & Meng, Chao, 2018. "Supply chain coordination under option contracts with joint pricing under price-dependent demand," International Journal of Production Economics, Elsevier, vol. 205(C), pages 74-86.
    14. Qiang Guo & Chris K. Anderson & Junfeng Dong & Pengfei Zhao & Qingkai Ji, 2020. "Coordination Contracts for Hotels and Online Travel Agents," Sustainability, MDPI, vol. 12(8), pages 1-17, April.
    15. Faiza Hamdi & Ahmed Ghorbel & Faouzi Masmoudi & Lionel Dupont, 2018. "Optimization of a supply portfolio in the context of supply chain risk management: literature review," Journal of Intelligent Manufacturing, Springer, vol. 29(4), pages 763-788, April.
    16. Li, Jin & Yang, Shilei & Shi, Victor & Zhai, Senjing, 2020. "Partial vertical centralization in competing supply chains," International Journal of Production Economics, Elsevier, vol. 224(C).
    17. Bo Yan & Xiaoxu Chen & Hongyuan Li & Yixian Sun, 2022. "Managing homogeneous products in two competing supply chains under price and logistics service," Electronic Commerce Research, Springer, vol. 22(3), pages 691-713, September.
    18. Araneda-Fuentes, Cristina & Lustosa, Leonardo Junqueira & Minner, Stefan, 2015. "A contract for coordinating capacity decisions in a business-to-business (B2B) supply chain," International Journal of Production Economics, Elsevier, vol. 165(C), pages 158-171.
    19. Shi, Xiutian & Dong, Ciwei & Cheng, T.C.E., 2018. "Does the buy-online-and-pick-up-in-store strategy with pre-orders benefit a retailer with the consideration of returns?," International Journal of Production Economics, Elsevier, vol. 206(C), pages 134-145.
    20. Taleizadeh, Ata Allah & Sadeghi, Razieh, 2019. "Pricing strategies in the competitive reverse supply chains with traditional and e-channels: A game theoretic approach," International Journal of Production Economics, Elsevier, vol. 215(C), pages 48-60.
    21. Ata Allah Taleizadeh & Mahsa Noori-daryan & Kannan Govindan, 2016. "Pricing and ordering decisions of two competing supply chains with different composite policies: a Stackelberg game-theoretic approach," International Journal of Production Research, Taylor & Francis Journals, vol. 54(9), pages 2807-2836, May.
    22. Li, Bo & Jiang, Yushan, 2019. "Impacts of returns policy under supplier encroachment with risk-averse retailer," Journal of Retailing and Consumer Services, Elsevier, vol. 47(C), pages 104-115.
    23. Zhang, Guangming & Dai, Gengxin & Sun, Hao & Zhang, Guitao & Yang, Zhilin, 2020. "Equilibrium in supply chain network with competition and service level between channels considering consumers' channel preferences," Journal of Retailing and Consumer Services, Elsevier, vol. 57(C).
    24. Wei Yan & Hengyu Li & Junwu Chai & Zhifeng Qian & Hong Chen, 2018. "Owning or Outsourcing? Strategic Choice on Take-Back Operations for Third-Party Remanufacturing," Sustainability, MDPI, vol. 10(1), pages 1-18, January.
    25. Boccali, Filippo & Mariani, Marcello M. & Visani, Franco & Mora-Cruz, Alexandra, 2022. "Innovative value-based price assessment in data-rich environments: Leveraging online review analytics through Data Envelopment Analysis to empower managers and entrepreneurs," Technological Forecasting and Social Change, Elsevier, vol. 182(C).

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