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Strategic Customer Behavior with Risk Preference for a Supply Chain Management Based on Double Channel

In: Recent Developments in Data Science and Business Analytics

Author

Listed:
  • Wanjin Hou

    (Beijing University of Posts and Telecommunications)

  • Quansheng Lei

    (Beijing University of Posts and Telecommunications)

Abstract

This paper consider a supply with a manufacturer, a retailer and an independent strategic customer. Strategic customer with risk preference can buy products through double channels which are physical channel of offline and internet channel of online. We use rational expectation equilibrium related knowledge, analyze the retailer best order quantity to reach profit maximization, analyze the best quantity of products delivered in the internet channel to reach profit maximize without risk preference. We find the retailer’s maximum profit is decreasing in risk preference in the physical channel as well as manufacturer’s in the internet channel. In order to ease the profit reduction, manufacturer and retailer should reduce price and quantity in their respective channel at the normal period. This is not consistent with the fact that price is raised in the normal period.

Suggested Citation

  • Wanjin Hou & Quansheng Lei, 2018. "Strategic Customer Behavior with Risk Preference for a Supply Chain Management Based on Double Channel," Springer Proceedings in Business and Economics, in: Madjid Tavana & Srikanta Patnaik (ed.), Recent Developments in Data Science and Business Analytics, chapter 0, pages 37-44, Springer.
    • Handle: RePEc:spr:prbchp:978-3-319-72745-5_4
    DOI: 10.1007/978-3-319-72745-5_4
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