Pricing and production decisions in dual-channel supply chains with demand and production cost disruptions

HUANG Song, YANG Chao, YANG Jun

Systems Engineering - Theory & Practice ›› 2014, Vol. 34 ›› Issue (5) : 1219-1229.

PDF(566 KB)
PDF(566 KB)
Systems Engineering - Theory & Practice ›› 2014, Vol. 34 ›› Issue (5) : 1219-1229. DOI: 10.12011/1000-6788(2014)5-1219

Pricing and production decisions in dual-channel supply chains with demand and production cost disruptions

  • HUANG Song1, YANG Chao2, YANG Jun2
Author information +
History +

Abstract

This paper studied the pricing and production decision problem in a one-manufacturer-one-retailer dual-channel supply chain under demand and production cost disruptions. It was assumed that the demand in each channel is linear in retail price and direct sale price. The impact of demand and production cost disruptions on the centralized and decentralized dual-channel supply chain's optimal pricing and production decisions was analyzed, respectively. By solving the Kuhn-Tucker conditions of the optimization problem, the dual-channel supply chain's optimal pricing and production decisions were obtained under different demand and production cost disruptions scenarios. It is found that the effects of demand and production cost disruptions interact with each other while the original production plan does not change.

Key words

supply chain management / disruption management / dual-channel / demand disruption / production cost disruption

Cite this article

Download Citations
HUANG Song , YANG Chao , YANG Jun. Pricing and production decisions in dual-channel supply chains with demand and production cost disruptions. Systems Engineering - Theory & Practice, 2014, 34(5): 1219-1229 https://doi.org/10.12011/1000-6788(2014)5-1219

References

[1] Chiang W K, Chhajed D, Hess J D. Direct marketing, indirect profits: A strategic analysis of dual channel supply-chain design[J]. Management Science, 2003, 49(1): 1-20.
[2] Tsay A, Agrawal N. Channel conflict and coordination in the E-commerce age[J]. Production and Operations Management, 2004, 13(1): 93-110.
[3] Levary R, Mathieu R G. Hybrid retail: Integrating e-commerce and physical stores[J]. Industrial Management, 2000, 42(5): 6-13.
[4] Bernstein F, Song J S, Zheng X. "Bricks-and-mortar" vs. "clicks-and-mortar": An equilibrium analysis[J]. European Journal of Operational Research, 2008, 187(3): 671-690.
[5] Seifert R W, Thonemann U W, Sieke M A. Integrating direct an indirect sales channel under decentralized decision-making[J]. International Journal of Production Economics, 2006, 103(1): 209-229.
[6] Mukhopadhyay S K, Zhu X, Yue X. Optimal contract design for mixed channels under information asymmetry[J]. Production and Operations Management, 2008, 17(6): 641-650.
[7] Yan R. Profit sharing and firm performance in the manufacturer-retailer dual-channel supply chain[J]. Electronic Commerce Research, 2008, 8(3): 155-172.
[8] Chen J, Zhang H, Sun Y. Implementing coordination contracts in a manufacturer Stackelberg dual-channel supply chain[J]. Omega, 2012, 40(5): 571-583.
[9] Dumrongsiri A, Fan M, Jain A, et al. A supply chain model with direct and retail channels[J]. European Journal of Operational Research, 2008, 187(3): 691-718.
[10] Cai G, Zhang Z G, Zhang M. Game theoretical perspective on dual-channel supply chain competition with price discount and price schemes[J]. International Journal of Production Economics, 2009, 117(2): 80-96.
[11] Cai G. Channel selection and coordination in dual-channel supply chains[J]. Journal of Retailing, 2010, 86(1): 22-36.
[12] Zhang R, Liu B, Wang W. Pricing decisions in a dual channels system with different power structures[J]. Economic Modelling, 2012, 29(2): 523-533.
[13] Yao D Q, Liu J J. Competitive pricing of mixed retail and e-tail distribution channels[J]. Omega, 2005, 33(3): 235-247.
[14] Hua G, Wang S, Cheng T C E. Price and lead time decisions in dual-channel supply chains[J]. European Journal of Operational Research, 2010, 205(1): 113-126.
[15] Xie J, Wei J C. Coordinating advertising and pricing in a manufacture-retailer channel[J]. European Journal Operational Research, 2009, 197(2): 785-791.
[16] 于辉, 陈剑, 于刚. 协调供应链如何应对突发事件[J]. 系统工程理论与实践, 2005, 25(7): 9-16.Yu Hui, Chen Jian, Yu Gang. How to coordinate supply chain under disruptions[J]. Systems Engineering——Theory & Practice, 2005, 25(7): 9-16.
[17] Yu G, Qi X. Disruption management: Framework, models and applications[M]. Singapore: World Scientific Publisher, 2004.
[18] Qi X, Bard J F, Yu G. Supply chain coordination with demand disruptions[J]. Omega, 2004, 32(4): 301-312.
[19] Zhang W, Fu J, Li H, et al. Coordination of supply chain with a revenue-sharing contract under demand disruptions when retailers compete[J]. International Journal of Production Economics, 2012, 138(1): 67-75.
[20] Xiao T, Qi X, Yu G. Coordination of supply chain after demand disruptions when retailers compete[J]. International Journal of Production Economics, 2007, 109(1-2): 162-179.
[21] Xiao T, Qi X. Price competition, cost and demand disruptions and coordination of a supply chain with one manufacturer and two competing retailers[J]. Omega, 2008, 36(5): 741-753.
[22] Chen K, Xiao T. Demand disruption and coordination of the supply chain with a dominant retailer[J]. European Journal of Operational Research, 2009, 197(1): 225-234.
[23] Chen K, Zhuang P. Disruption management for a dominant retailer with constant demand-stimulating service cost[J]. Computers & Industrial Engineering, 2011, 61(4): 936-946.
[24] Huang C, Yu G, Wang S, et al. Disruption management for supply chain coordination with exponential demand function[J]. Acta Mathematica Scientia, 2006, 26(4): 655-669.
[25] Xu M, Qi X, Yu G, et al. Coordinating dyadic supply chains when production costs are disrupted[J]. IIE Transactions, 2006, 38(9): 765-775.
[26] 雷东, 高成修, 李建斌. 需求和生产成本同时发生扰动时的供应链协调[J]. 系统工程理论与实践, 2006, 26(9): 51-59.Lei Dong, Gao Chengxiu, Li Jianbin. Supply chain coordination with demand and production cost disruptions[J]. Systems Engineering——Theory & Practice, 2006, 26(9): 51-59.
[27] 曹二保, 赖明勇. 成本和需求同时扰动时供应链协调合约研究[J]. 管理科学学报, 2010, 13(7): 9-15.Cao Erbao, Lai Mingyong. Research on coordination mechanism of supply chains when demand and cost are disrupted[J]. Journal of Management Sciences in China, 2010, 13(7): 9-15.
[28] 曹二保, 赖明勇. 需求和成本同时扰动时多零售商供应链协调[J]. 系统工程理论与实践, 2010, 30(10): 1753-1761.Cao Erbao, Lai Mingyong. Coordination mechanism of supply chain including multiple retailers when demand and cost are disrupted[J]. Systems Engineering——Theory & Practice, 2010, 30(10): 1753-1761.
[29] Cao E, Wan C, Lai M. Coordination of a supply chain with one manufacturer and multiple competing retailers under simultaneous demand and cost disruptions[J]. International Journal of Production Economics, 2013, 141(1): 425-433.
[30] Lei D, Li J, Liu Z. Supply chain contracts under demand and cost disruptions with asymmetric information[J]. International Journal of Production Economics, 2012, 139(1): 116-126.
[31] Huang S, Yang C, Zhang X. Pricing and production decisions in dual-channel supply chains with demand disruptions[J]. Computers & Industrial Engineering, 2012, 62(1): 70-83.
[32] Chen J, Zhang H, Sun Y. Implementing coordination contracts in a manufacturer Stackelberg dual-channel supply chain[J]. Omega, 2012, 40(5): 571-583.
PDF(566 KB)

600

Accesses

0

Citation

Detail

Sections
Recommended

/