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Operation strategies with respect to insurance subsidy optimization for online retailers dealing with large items

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  • Zhou, Wei
  • Zhang, Keang
  • Zhang, Ying
  • Duan, Yunlong

Abstract

In order to promote sales, some online platforms put forward freight insurance. However, as we know, only two cases are provided by online retailers in current online platforms. One is no freight insurance subsidy, the other is full freight insurance subsidy covered all goods. As the sale of large items in online platforms is more difficult than other merchandise, we focus on the freight insurance of selling large items online in the paper. The cases of freight insurance subsidy for partial goods and partial freight insurance subsidy in supply chain are introduced. Freight insurance subsidy for partial goods and partial freight insurance subsidy both contain a case of no freight insurance subsidy and a case of full freight insurance subsidy covered all goods. To study these two new types of freight insurance, we improve a new form of newsvendor model and introduce new demand functions, based on them, we focus on researching the problems of order, insurance and marketing in upstream and downstream two-echelon supply chains. Through these studies, we can get operation strategies that include order, insurance and marketing strategies with respect to optimal insurance subsidies, so that help online retailers sell large items and make more profits. Lastly, we provide two examples to illustrate the validity of the proposed methods.

Suggested Citation

  • Zhou, Wei & Zhang, Keang & Zhang, Ying & Duan, Yunlong, 2021. "Operation strategies with respect to insurance subsidy optimization for online retailers dealing with large items," International Journal of Production Economics, Elsevier, vol. 232(C).
    • Handle: RePEc:eee:proeco:v:232:y:2021:i:c:s0925527320302978
    DOI: 10.1016/j.ijpe.2020.107944
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    2. Chen, Zhongwei & Fan, Zhi-Ping & Zhu, Stuart X., 2023. "Extracting values from consumer returns: The role of return-freight insurance for competing e-sellers," European Journal of Operational Research, Elsevier, vol. 306(1), pages 141-155.

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