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Impact of uncertain demand and channel power on dual channel supply chain decisions

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  • Liu-wei Zhao
  • Yin Zhao

Abstract

The paper aims to conduct an analysis of pricing strategies in a dual channel supply chain under external uncertainty, utilizing Interval numbers theory and Game theory as the theoretical basis. The focus is on maximizing the expected profits of manufacturers and retailers. Four models are considered: centralized decision-making, manufacturer’s Stackelberg, retailer’s Stackelberg strategy, and vertical Nash model, with the decision variable being the product price. By solving the game model, the paper compares the optimal decisions under the four models and conducts sensitivity analysis to reflect the influence of key parameters and analyze their relationships. The ultimate goal is to optimize profits under various circumstances by adjusting market potential and price parameters to determine the best price level. The findings suggest that decision-maker’s risk indicators have a greater impact on decision results when market demand is less sensitive to price, and that the size of the market has a negative correlation with the impact of decision-maker’s risk indicators on decision results.

Suggested Citation

  • Liu-wei Zhao & Yin Zhao, 2024. "Impact of uncertain demand and channel power on dual channel supply chain decisions," PLOS ONE, Public Library of Science, vol. 19(3), pages 1-23, March.
    • Handle: RePEc:plo:pone00:0300386
    DOI: 10.1371/journal.pone.0300386
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    References listed on IDEAS

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    1. Kyle Cattani & Wendell Gilland & Hans Sebastian Heese & Jayashankar Swaminathan, 2006. "Boiling Frogs: Pricing Strategies for a Manufacturer Adding a Direct Channel that Competes with the Traditional Channel," Production and Operations Management, Production and Operations Management Society, vol. 15(1), pages 40-56, March.
    2. Kurata, Hisashi & Yao, Dong-Qing & Liu, John J., 2007. "Pricing policies under direct vs. indirect channel competition and national vs. store brand competition," European Journal of Operational Research, Elsevier, vol. 180(1), pages 262-281, July.
    3. Panda, S. & Modak, N.M. & Sana, S.S. & Basu, M., 2015. "Pricing and replenishment policies in dual-channel supply chain under continuous unit cost decrease," Applied Mathematics and Computation, Elsevier, vol. 256(C), pages 913-929.
    4. Amy David & Elodie Adida, 2015. "Competition and Coordination in a Two-Channel Supply Chain," Production and Operations Management, Production and Operations Management Society, vol. 24(8), pages 1358-1370, August.
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    Cited by:

    1. Feng Luo & Shihan Chen & Tiantong Xu & Muzaffar Iqbal, 2026. "Self-broadcasting or cooperating with an anchor? Strategy and dynamic system research on different sales modes in live commerce supply chain," Electronic Commerce Research, Springer, vol. 26(2), pages 2015-2054, April.
    2. Yue Yu & Songshi Shao & Mingli Yuan & Minghe Sun, 2025. "Traditional online and live-streaming dual-channel strategies and pricing policies," PLOS ONE, Public Library of Science, vol. 20(1), pages 1-24, January.
    3. Qianlan Chen & Siyi Mao & Ke Xu & Lin Lu, 2024. "Coordination strategy and contract design of platform supply chain for large-scale sports events with low carbon preference," PLOS ONE, Public Library of Science, vol. 19(12), pages 1-37, December.

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