Abstract

Dual channel supply chain (DCSC) has been attracting many researchers' attention. Their contributions mainly are in two folds, namely pricing problem and inventory policy. However, research to address both pricing and inventory problems simultaneously are still scarce. Meanwhile in recent competitive market, product substitution is an unavoidable practice in fulfilling customer demand when the main product is unavailable. Thus how to decide price and order quantity by considering product substitution under DCSC setting is an interesting topic to address. In this paper, corresponding mathematical model incorporating such problem is proposed. This model consists of objective function measuring sales revenue and inventory cost, and some constraints to assure positive profit margin, interplaying price between online and offline channel, and positive demand. Two pricing schemes, namely Vertical Nash and Stackelberg Leadership are evaluated. The result shows that in any situation of substitution level, Vertical Nash solution provides higher financial performance than that under Stackelberg Leadership. In addition, this work's results have also revealed that there exist some threshold values differentiating when it is better off to apply Vertical Nash scenario an, when Stackelberg Leadership scenario is preferable.

Original languageEnglish
Title of host publication3rd International Materials, Industrial and Manufacturing Engineering Conference, MIMEC 2017
EditorsWakhid Ahmad Jauhari, Denni Kurniawan, Wahyudi Sutopo, Fethma M. Nor
PublisherAmerican Institute of Physics Inc.
ISBN (Electronic)9780735415904
DOIs
Publication statusPublished - 7 Nov 2017
Event3rd International Materials, Industrial and Manufacturing Engineering Conference, MIMEC 2017 - Miri, Malaysia
Duration: 6 Dec 20178 Dec 2017

Publication series

NameAIP Conference Proceedings
Volume1902
ISSN (Print)0094-243X
ISSN (Electronic)1551-7616

Conference

Conference3rd International Materials, Industrial and Manufacturing Engineering Conference, MIMEC 2017
Country/TerritoryMalaysia
CityMiri
Period6/12/178/12/17

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