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Two-Step Pricing Decision Models for Manufacturer-Led Dual-Channel Supply Chains

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  • Xuelong Zhang

    (School of Economics and Management, Guangxi Normal University, Guilin 541004, China
    School of Business, Guilin University of Electronic Technology, Guilin 541004, China)

  • Doudou Wu

    (School of Business, Guilin University of Electronic Technology, Guilin 541004, China)

  • Xiangzhong Zhao

    (College of Foreign Studies, Guilin Institute of Information Technology, Guilin 541004, China)

Abstract

In this paper, we study the optimal profit change in a manufacturer-led dual-channel supply chain under centralized decision-making and decentralized decision-making scenarios. The supply chain is composed of only a single supplier, a manufacturer, and a retailer, and the manufacturer plays a leading role in the supply chain. Meanwhile, the following conditions exist simultaneously: the promotion levels of retailers in offline physical stores, the promotion compensation given by manufacturers to retailers, and channel competition. In order to coordinate the profits of channel members, a two-step pricing decision model is established. This research shows that using a two-step pricing decision model can make the retailer’s optimal promotion fees and the manufacturer’s optimal sales compensation fees the same as the centralized decision-making’s optimal values; however, the results are not good, because after the coordination, the retailer’s profits increase and the manufacturer’s profits decrease, and, as a consequence, the retailer needs to pay a fixed fee to the manufacturer within the validity of the contract, which is signed by both sides, to achieve a win–win situation for the channel members.

Suggested Citation

  • Xuelong Zhang & Doudou Wu & Xiangzhong Zhao, 2022. "Two-Step Pricing Decision Models for Manufacturer-Led Dual-Channel Supply Chains," Sustainability, MDPI, vol. 14(16), pages 1-13, August.
    • Handle: RePEc:gam:jsusta:v:14:y:2022:i:16:p:10005-:d:886895
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    References listed on IDEAS

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