Consumer search, transshipment, and bargaining power in a supply chain
Meng Li and
Tao Li
International Journal of Production Research, 2018, vol. 56, issue 10, 3423-3438
Abstract:
We study a decentralised supply chain with one manufacturer and two symmetric retailers who could transship their excess inventory between each other. Without transshipment, the retailer’s unsatisfied customers search and buy the product at the other retailer with some probability. With transshipment, the retailer can transship the other retailer’s excess inventory to fulfil its own unmet demand. However, a transshipment price is often charged by one retailer for transshipping goods to another. We show the retailer’s profit is unimodal in the transshipment price, and the manufacturer’s profit increases in the customer search probability. Although the retailer’s preference over transshipment depends on the magnitude of search probability and transshipment price, the retailer may always prefer the transshipment no matter their magnitude. We then study the effect of bargaining power over the transshipment decision (whether to transship between retailers and at what transshipment price). Our analysis suggests that the manufacturer always prefers to control the transshipment price rather than to control whether to transship, while the retailer can prefer both. We also find that increasing bargaining power always benefits the manufacturer but could hurt the retailer. We finally check the robustness of our results by investigating the case with asymmetric retailers
Date: 2018
References: Add references at CitEc
Citations: View citations in EconPapers (6)
Downloads: (external link)
http://hdl.handle.net/10.1080/00207543.2017.1326644 (text/html)
Access to full text is restricted to subscribers.
Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:taf:tprsxx:v:56:y:2018:i:10:p:3423-3438
Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/TPRS20
DOI: 10.1080/00207543.2017.1326644
Access Statistics for this article
International Journal of Production Research is currently edited by Professor A. Dolgui
More articles in International Journal of Production Research from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().