Managing a dual-channel supply chain under price and delivery-time dependent stochastic demand

Nikunja Mohan Modak and Peter Kelle

European Journal of Operational Research, 2019, vol. 272, issue 1, 147-161

Abstract: Several leading manufacturers recently combined the traditional retail channel with a direct online channel to reach a wider range of customers. We examine such a dual-channel supply chain under price and delivery-time dependent stochastic customer demand. We consider five decision variables, the price and order quantity for both the retail and the online channels and the delivery time for the online channel. Uncertainty frequently arises in both retail and online channels and so additional inventory management is required to control shortage or overstock and that has an effect on the optimal order quantity, price, and lead time. We developed mathematical models with the profit maximization motive. We analyze both centralized and decentralized systems for unknown distribution function of the random variables through a distribution-free approach and also for known distribution function. We examine the effect of delivery lead time and customers’ channel preference on the optimal operation. For supply chain coordination a hybrid all-unit quantity discount along a franchise fee contract is used. Moreover, we use the generalized asymmetric Nash bargaining for surplus profit distribution. A numerical example illustrates the findings of the model and the managerial insights are summarized for centralized, decentralized, and coordinated scenarios.

Keywords: Supply chain management; Supply chain coordination; Dual-channel supply chain; Price dependent demand; Lead time dependent demand; Stochastic demand; Distribution-free approach (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (58)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ejores:v:272:y:2019:i:1:p:147-161

DOI: 10.1016/j.ejor.2018.05.067

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