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Price competition and coordination of dual-channel supply chains

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  • Chunhua Tang
  • Taosheng Wang

Abstract

The dual-channel is a more prevalent channel structure in current marketing systems, it including the traditional retail channel and the direct channel through web-based sales. And price competition and channel conflict are inevitable between retail channel and the manufacturer's direct sale channel. This paper develops pricing decisions and coordination models in a one-manufacturer-one retailer dual-channel supply chain. We fully characterise partners' optimal decisions by adopting a customer's utility function. We discuss the optimal decisions in decentralised dual-channel supply chain including market-like setting without revenue sharing contract and contract-like setting, and obtain the optimal prices and quantity decisions in centralised and decentralised dual-channel supply chain. Moreover, we propose the feasible revenue-sharing contracts to coordinate the dual-channel supply chain, and obtain the optimal parameters of the revenue sharing contract. It is always beneficial for both the partners and system to adopt a revenue sharing contract. Finally, the proposed models are further analysed through numerical examples.

Suggested Citation

  • Chunhua Tang & Taosheng Wang, 2013. "Price competition and coordination of dual-channel supply chains," International Journal of Networking and Virtual Organisations, Inderscience Enterprises Ltd, vol. 13(4), pages 297-310.
    • Handle: RePEc:ids:ijnvor:v:13:y:2013:i:4:p:297-310
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    Cited by:

    1. Umangi Pathak & Ravi Kant & Ravi Shankar, 2020. "Effect of buyback price on channel’s decision parameters for manufacturer-led close loop dual supply chain," OPSEARCH, Springer;Operational Research Society of India, vol. 57(2), pages 438-461, June.

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