Advance booking pricing in O2O commerce with demand leakage using game theory for tourism supply chains

Mahsa Noori-daryan, Ata Allah Taleizadeh and Masoud Rabbani

International Journal of Production Research, 2020, vol. 58, issue 22, 6739-6774

Abstract: In this research, the pricing and selling decisions of two supply chains are examined to maximise the profit of the chains considering an advance booking policy where the chains offer complementary items and customers able to buy products from both online and real stores (offline). The proposed model is developed without/with online-to-offline (O2O) retail marketing under the first and second scenarios, respectively. In addition, there is a possibility of demand leakage between the online and offline channels, thus customers can take advantage of the channel that would be most desirable for them. The behaviors of the partners are surveyed by different game-theoretic approaches under two scenarios to determine the optimal decisions and the optimal values of variables and the profits of the chains. Then, the closed form solutions are derived which are examined by a numerical example and sensitivity analyses are performed to analyse the efficiency of key parameters. It is found that employing O2O marketing mechanism causes more profit for chains due to enhancing the market demand. Also, advance booking policy leads to manage the market and attract the customers who follow the items at lower prices so that longer advance booking periods, more orders and higher profits.

Date: 2020
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Citations: View citations in EconPapers (2)

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DOI: 10.1080/00207543.2019.1685703

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