Pricing and service optimization in complementary closed-loop supply chain based on channel effort

XIE Jiaping, LIANG Ling, KONG Fanyu, KONG Hewei

Systems Engineering - Theory & Practice ›› 2017, Vol. 37 ›› Issue (9) : 2331-2343.

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Systems Engineering - Theory & Practice ›› 2017, Vol. 37 ›› Issue (9) : 2331-2343. DOI: 10.12011/1000-6788(2017)09-2331-13

Pricing and service optimization in complementary closed-loop supply chain based on channel effort

  • XIE Jiaping1, LIANG Ling2, KONG Fanyu1, KONG Hewei1
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Abstract

This paper considered the problem of optimal pricing decision, inventory, channel effort level and optimal recovery in two contexts based on a complementary dual-channel with online sales and offline services model in a closed-loop supply chain. One context is the online distributor led pricing and service decisions (M mode); the other one is single online distributor-single offline service provider based on revenue-sharing mechanism (M-S mode). By comparing the two situations, we find that channel services-on sensitive coefficient of service are elasticity, but only in the M mode, the recovery price on sensitive coefficients of service is elasticity. Then, we further studied the pricing and service decisions in a context by successive-period recovery. We find that if the remanufacturing cost savings increase and channel services are sensitive to demand, M mode would improve service levels and reduce product price to maintain market share; but M-S mode with revenue-sharing mechanism, service levels would reduce and the product price would be lower. And when the forward channel services are equal to the reverse channel losses, the service providers would no longer make decisions based on the distributor's pricing decision. Finally, we observed the different influence on transfer coefficients on forward/reverse proportion of service levels and the influence on decision variables.

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complementary channel / revenue sharing / product and recovery pricing / channel effort level

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XIE Jiaping , LIANG Ling , KONG Fanyu , KONG Hewei. Pricing and service optimization in complementary closed-loop supply chain based on channel effort. Systems Engineering - Theory & Practice, 2017, 37(9): 2331-2343 https://doi.org/10.12011/1000-6788(2017)09-2331-13

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Funding

National Natural Science Foundation of China (71272015, 71402053, 71273091)
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