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Optimal pricing decision in a multi-channel supply chain with a revenue-sharing contract

Author

Listed:
  • Zhen-Song Chen

    (Wuhan University)

  • Sheng Wu

    (Henan University of Economic and Law)

  • Kannan Govindan

    (Shanghai Maritime University
    Danish Institute for Advanced Study, University of Southern Denmark
    Yonsei University
    Woxsen University, Sadasivpet)

  • Xian-Jia Wang

    (Wuhan University)

  • Kwai-Sang Chin

    (City University of Hong Kong)

  • Luis Martíınez

    (University of Jaén)

Abstract

As a significant component of supply chain management, multi-channel pricing decision has received extensive attention in recent years. Many studies have focused on single-channel pricing decision, while limited research has been done on multi-channel pricing decision with a revenue-sharing contract. This paper establishes a multi-channel optimal pricing decision model with a revenue-sharing contract (entailing a revenue apportionment and an additional reward) in the context of a cross-channel effect, consumers trust utility, and after-sales service utility, all of which play roles in increasing or reducing supply chain members’ expected profits. The results indicate that, in a bid to obtain maximum profit, manufacturer and reseller will take different measures for varying levels of differences between cross-channel effects of direct seller (D-seller) and reseller (R-seller), for different levels of consumer trust utility, and for different levels of after-sales service utility. Manufacturer and reseller both try their best to decrease the impact of sales format differences on electronic channel when the differences are small, but the action is opposite when the differences are large. In addition, manufacturer should not blindly improve the additional trust of direct-sale stores relative to reseller, but instead should increase additional reward to R-seller when manufacturer decides to improve the after-sales service of products through D-seller.

Suggested Citation

  • Zhen-Song Chen & Sheng Wu & Kannan Govindan & Xian-Jia Wang & Kwai-Sang Chin & Luis Martíınez, 2022. "Optimal pricing decision in a multi-channel supply chain with a revenue-sharing contract," Annals of Operations Research, Springer, vol. 318(1), pages 67-102, November.
    • Handle: RePEc:spr:annopr:v:318:y:2022:i:1:d:10.1007_s10479-022-04748-7
    DOI: 10.1007/s10479-022-04748-7
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    2. He, Peng & He, Yong & Zhou, Li, 2023. "Channel strategies for dual-channel firms to counter strategic consumers," Journal of Retailing and Consumer Services, Elsevier, vol. 70(C).

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