Quantity Leadership for a Dual-Channel Supply Chain with Retail Service

Ciwei Dong (), Liu Yang () and Chi To Ng
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Ciwei Dong: School of Business Administration, Zhongnan University of Economics and Law, Wuhan 430073, P. R. China
Liu Yang: Business School, University of International Business and Economics, Chaoyang District, Beijing 100029, P. R. China
Chi To Ng: Logistics Research Centre, Department of Logistics and Maritime Studies, The Hong Kong Polytechnic University, Hung Hom, Kowloon, Hong Kong

Asia-Pacific Journal of Operational Research (APJOR), 2020, vol. 37, issue 02, 1-32

Abstract: In a dual-channel supply, the manufacturer sells the products by both a traditional channel via the retailer and an online channel directly. Comparing with the direct channel, the retailer may provide additional services to the traditional channel. This paper studies the quantity leadership for a dual-channel supply chain with retail service. The manufacturer decides the wholesale price of the products and its selling quantity via the online channel, and the retailer decides the service level and its selling quantity via the traditional channel. We consider three Cournot competition games: Manufacturer-as-leader game, retailer-as-leader game, and simultaneous game. Optimal solutions are derived for these games. Based on the optimal solutions, we investigate the quantity leadership/followership decisions for the manufacturer and retailer, associated with the changes of some parameters. We observe that when the service sensitivity parameters are low, being a follower is a dominant strategy for the retailer; otherwise, both strategies of manufacturer-as-leader (retailer as the follower) and retailer-as-leader (manufacturer as the follower) are Nash equilibriums. We further conduct the numerical studies to investigate the impacts of parameters related to the retail service, and discuss the insights of the findings.

Keywords: Quantity leadership; dual-channel; retail service; channel competition (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (1)

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DOI: 10.1142/S0217595920500050

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