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Pricing And Inventory Strategies For A Two-Stage Dual-Channel Supply Chain

Author

Listed:
  • RUN H. NIU

    (George Herbert Walker School of Business and Technology, Webster University, St. Louis, MO, 63119, USA)

  • XUAN ZHAO

    (School of Business and Economics, Wilfrid Laurier University, Waterloo, Ontario, N2L 3C5, Canada)

  • IGNACIO CASTILLO

    (School of Business and Economics, Wilfrid Laurier University, Waterloo, Ontario, N2L 3C5, Canada)

  • TARJA JORO

    (Department of Finance and Management Science, University of Alberta School of Business, Edmonton, Alberta, T6G 2R6, Canada)

Abstract

The Internet is becoming increasingly important as a sales channel. Thus, most large retail firms have adopted a multi-channel strategy that includes both web-based channels and pre-existing offline channels. In this paper, we consider joint pricing and inventory/production decision problems for members in a monopoly two-stage dual-channel retailer supply chain. For a dual-channel retailer, pricing in one channel will affect the demand in the other channel. This subsequently affects the retailer's replenishment (ordering) decisions, which have an impact on the producer's inventory/production plans and wholesale price decisions. It is clear then that pricing decisions and inventory/production decisions are interacting in each member of the supply chain and among the members in the chain as well. In this paper, we analyze joint pricing and inventory/production problems under three scenarios by incorporating intra-product line price interaction in the EOQ model. We show that a unique equilibrium exists under certain realistic conditions. We also provide numerical results that offer insights for pricing strategies for the dual-channel retailer supply chain and for product design for different channels.

Suggested Citation

  • Run H. Niu & Xuan Zhao & Ignacio Castillo & Tarja Joro, 2012. "Pricing And Inventory Strategies For A Two-Stage Dual-Channel Supply Chain," Asia-Pacific Journal of Operational Research (APJOR), World Scientific Publishing Co. Pte. Ltd., vol. 29(01), pages 1-38.
    • Handle: RePEc:wsi:apjorx:v:29:y:2012:i:01:n:s0217595912400040
    DOI: 10.1142/S0217595912400040
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    Citations

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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. 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.
    3. Chengli Liu & C. K. M. Lee & K. H. Leung, 2019. "Pricing Strategy in Dual-Channel Supply Chains with Loss-Averse Consumers," Asia-Pacific Journal of Operational Research (APJOR), World Scientific Publishing Co. Pte. Ltd., vol. 36(05), pages 1-22, October.
    4. 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.
    5. Xie, JiaPing & Liang, Ling & Liu, LuHao & Ieromonachou, Petros, 2017. "Coordination contracts of dual-channel with cooperation advertising in closed-loop supply chains," International Journal of Production Economics, Elsevier, vol. 183(PB), pages 528-538.
    6. Zhang, Chu & Zheng, Xiaona, 2021. "Customization strategies between online and offline retailers," Omega, Elsevier, vol. 100(C).
    7. Abhishek Chakraborty, 2021. "A surcharge pricing policy for supply chain coordination under the just-in-time (JIT) environment in the presence of backordering," OPSEARCH, Springer;Operational Research Society of India, vol. 58(4), pages 1049-1076, December.

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