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An Equilibrium Model of Online Shopping Supply Chain Networks with Service Capacity Investment

Author

Listed:
  • Yihong Hu

    (School of Economics and Management, Tongji University, Shanghai 200092, China)

  • Qiang Qiang

    (Management Division, Great Valley School of Graduate Professional Studies, Pennsylvania State University, Malvern, Pennsylvania 19355)

Abstract

In this paper we propose an online shopping supply chain network model that includes manufacturers, e-tailers, express service providers, and consumers. Consumers purchase products from e-tailers that can be either delivered by the express service companies or picked up by the customers themselves at certain physical locations, depending on the consumers' preferences on time and cost. In addition, the express service companies can make investments to improve their service quality. We identify the network structure of the problem, derive the equilibrium conditions, and establish the finite-dimensional variational inequality formulation. Theoretical results and numerical examples are presented to provide some managerial insights of the model.

Suggested Citation

  • Yihong Hu & Qiang Qiang, 2013. "An Equilibrium Model of Online Shopping Supply Chain Networks with Service Capacity Investment," Service Science, INFORMS, vol. 5(3), pages 238-248, September.
    • Handle: RePEc:inm:orserv:v:5:y:2013:i:3:p:238-248
    DOI: 10.1287/serv.2013.0048
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