Optimizing Channel Profit in a Retail Dual-channel Supply Chain When Considering Delivery Lead Time

Facing competition from manufacturers' online direct channels, how retailers make sales channel decisions to increase consumer stickiness has become the core concern of the industry and academia. Empirical research showed that delivery lead time is a key factor that affects consumers' preference for online channels. To analyze the impact of consumer delivery time preference on channel selection and pricing strategy of retailers, consumer delivery lead time preference function was improved from a linear function to an exponential function and consumer demand under the mixed dual-channel supply chain of manufacturer and retailer was derived. Then, the Stackelberg game models under different channel strategies of retailer were established and solved. Results show that consumer preference for delivery lead time has four implications on the channel decision of retailers under manufacturer encroachment in the dual-channel supply chain. First, the dual retail channels strategy is the optimal choice for retailers, and the profit margins that a retailer obtains from dual retail channels supply chain and single online retail channel supply chain will increase as consumers' delivery lead time preference coefficient increases. Second, the optimal pricing of online retail channel and offline retail channel is positively related to consumers' delivery lead time preference coefficient. By contrast, the optimal pricing of online direct channel is negatively related to consumers' delivery lead time preference coefficient. Third, the optimal pricing of online retail channel is higher than that of offline retail and online direct channels. Fourth, a retailer and a manufacturer can adopt a compensation-based whole price contract to address the conflict brought about by the optimal channel choice of the retailer. This study introduces consumer delivery lead time preference into retailer channel decision making and provides a theoretical reference for retailer's mixed channel construction in practice.

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Model Three-Level Dual-Channel Supply Chain pada Sistem Sentralisasi dengan Memertimbangkan Waktu Tunggu Pengiriman

d'CARTESIAN ◽

10.35799/dc.9.1.2020.27849 ◽

2020 ◽

Vol 9 (1) ◽

pp. 72

Author(s):

Shinta Nur Pratiwi Ramadhani ◽

Ririn Setiyowati ◽

Titin Sri Martini

Keyword(s):

Supply Chain ◽

Lead Time ◽

Nonlinear Function ◽

Optimal Solution ◽

Global Market ◽

Centralize System ◽

Dual Channel ◽

Total Profit ◽

Online Channel ◽

Dual Channel Supply Chain

AbstrakEra pasar global telah mengubah kebiasaan konsumen dalam membeli produk, sehingga konsumen dapat membeli produk melalui media online. Oleh karena itu, produsen mengembangkan media penjualannya melalui media online dan offline. Pada penelitian ini dikembangkan model three-level dual-channel supply chain dengan memertimbangkan waktu tunggu pengiriman pada penjualan melalui media online yang dilakukan oleh produsen serta mengembangkan media penjualan distributor sehingga distributor dapat menjual produk secara langsung ke konsumen. Konstruksi model bertujuan untuk mengoptimalkan keuntungan gabungan produsen, distributor, dan pengecer dengan sistem sentralisasi. Fungsi keuntungan gabungan merupakan fungsi nonlinear tanpa kendala dengan tiga variabel keputusan yaitu harga jual produsen pada media online, harga jual distributor langsung ke konsumen, dan harga jual pengecer ke konsumen. Selanjutnya, ditentukan solusi optimal model berdasarkan syarat perlu dan syarat cukup untuk fungsi multivariabel tanpa kendala. Berdasarkan simulasi numerik dan analisis sensitivitas dapat dilihat pengaruh faktor waktu tunggu pengiriman terhadap fungsi keuntungan gabungan yang optimal. Ditunjukkan bahwa lamanya waktu tunggu pengiriman sangat berpengaruh pada besarnya keuntungan optimal gabungan produsen, distributor, dan pengecer.Kata Kunci: Sentralisasi, Three-Level, Waktu TungguAbstractThe global market era changes the consumer behavior to shop the product, so the consumer can buy through online channel. Therefore, the producer develop the selling channel to sell their products through online channel and offline channel. In this research, we develop the three-level dual-channel supply chain by notice delivery lead time in the online channel used by the producer and develop selling channel from distributors so distributors can sell their product to consumer with direct selling. We construct the model with profit maximization motive of the system that consists producer, distributors, and retailer in the centralize system. The total profit function is nonlinear function without constrains with three decision variables. Furthermore, we determine the optimal solution of the model based on necessary and sufficient condition. Based on numerical simulations and sensitivity analysis we analyze the effect of delivery lead time strongly influences the optimal total profit system.Keywords: Centralize, Lead Time, Three-Level

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The study on price and lead time decisions in retailer-dominated dual-channel supply chain

Journal of Interdisciplinary Mathematics ◽

10.1080/09720502.2017.1358869 ◽

2017 ◽

Vol 20 (3) ◽

pp. 805-819 ◽

Cited By ~ 1

Author(s):

Yi-Bin Li ◽

Chun-Pei Lin ◽

Tung-Ju Wu ◽

Jin-Long Chen

Keyword(s):

Supply Chain ◽

Lead Time ◽

Dual Channel ◽

Dual Channel Supply Chain

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Impacts of pre-sales service and delivery lead time on dual-channel supply chain design

Computers & Industrial Engineering ◽

10.1016/j.cie.2020.106579 ◽

2020 ◽

Vol 147 ◽

pp. 106579 ◽

Cited By ~ 1

Author(s):

Jinsen Guo ◽

Bin Cao ◽

Wei Xie ◽

Yuanguang Zhong ◽

Yong-Wu Zhou

Keyword(s):

Supply Chain ◽

Lead Time ◽

Supply Chain Design ◽

Dual Channel ◽

Dual Channel Supply Chain

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Managing a retailer’s dual-channel supply chain under price- and delivery time-sensitive demand

Journal of Modelling in Management ◽

10.1108/jm2-10-2016-0089 ◽

2018 ◽

Vol 13 (2) ◽

pp. 351-374 ◽

Cited By ~ 20

Author(s):

Subrata Saha ◽

Nikunja Mohan Modak ◽

Shibaji Panda ◽

Shib Sankar Sana

Keyword(s):

Supply Chain ◽

Cost Sharing ◽

Lead Time ◽

Channel Structure ◽

Analytical Models ◽

Delivery Time ◽

Delivery Cost ◽

Content Type ◽

Dual Channel ◽

Dual Channel Supply Chain

Purpose This paper aims to explore optimal pricing policies and characteristics of a two-level dual-channel supply chain under price- and delivery time-sensitive demand. Besides price of the product, the delivery lead time is also a crucial factor in customers’ purchase decisions. A longer delivery lead time would diminish customers’ acceptance and faithfulness on the online channel, while a shorter delivery lead time would lead to incorporation of a substantial amount of logistics costs. In formulation of mathematical model, the effects of delivery lead time on the manufacturer and the retailer’s pricing strategies and profits in cooperative and non-cooperative dual-channel supply chain are explained analytically. Design/methodology/approach The analytical models are formed for both non-cooperative and cooperative scenarios under inconsistent and consistent pricing. The authors examine whether revenue sharing (RS) contract or delivery cost sharing contract can solely coordinate the dual-channel supply chain. If a single contract fails, then the combination of RS contract with delivery cost sharing to achieve channel coordination is discussed. Findings It is found that the RS or delivery cost sharing contract cannot coordinate the channel individually but revenue and delivery cost sharing contract jointly coordinate the channel. All analytical results are illustrated numerically, along with sensitivity analysis. Research limitations/implications There are many correlated issues that need to be further investigated. First, one good extension to this research may include the consideration of the channel structure with competitive retailers. It will be interesting to analyze the performance of coordination mechanisms by considering the retailer as a Stackelberg leader in retailing. Originality/value The findings and subsequent methodological discussions aim to provide practical guidance to retailers who are allowing customers to choose how, when and where they interact and purchase by offering a combination of websites (fully functional and mobile-enabled), catalogs and stores with increasing convergence of channels.

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