Analysis of Pricing and Service Effort in Dual-Channel Supply Chains with Showrooming Effect

2020 ◽  
Vol 30 (16) ◽  
pp. 2050241
Author(s):  
Junhai Ma ◽  
Yaping Li ◽  
Zongxian Wang
Keyword(s):  
Supply Chain ◽  
Wholesale Price ◽  
Stable State ◽  
Dynamic Game ◽  
Price Adjustment ◽  
Flip Bifurcation ◽  
Stability Range ◽  
Dual Channel ◽  
Adjustment Speed ◽  
The Stability

Showrooming has become common practice of consumers in the context of dual-channel retailing. Under different intensities of showrooming, the manufacturer can decide whether to directly retail online (the M-R case) or resell through an e-retailer (the E-R case). Dual-channel supply chain models and dynamic game models are developed and both online selling formats are investigated. The dynamic game process of the supply chain is numerically simulated. The stability of the Nash equilibrium point is investigated by parameter basins for periodical cycles and bifurcation diagrams. The results show that the price adjustment speeds have a larger stability range in the M-R case while the service effort adjustment speed has a larger stability range in the E-R case. The stability of the systems is more sensitive to price adjustment speed than service effort adjustment speed in both supply chain structures. It is found that the systems will enter chaos through a flip bifurcation or a Neimark–Sacker bifurcation. The changes in attractors and basins of attraction indicate that both channels can reach the equilibria more easily when they choose a lower speed of retail price adjustment. The effects of showrooming on decision variables are greater in the M-R case than in the E-R case. When the showrooming effect is moderate, the manufacturer should choose the M-R case; when the showrooming effect is sufficiently large or sufficiently small, the manufacturer should choose the E-R case. We propose a wholesale price markdown strategy which can: (i) eliminate the double marginalization and coordinate the supply chain; (ii) effectively control the chaos caused by the overhigh adjustment speed of wholesale price, and restore the system to a stable state; (iii) improve the retailer’s service effort.

Study and Simulation on Dynamics of a Risk-Averse Supply Chain Pricing Model with Dual-Channel and Incomplete Information

2016 ◽  
Vol 26 (09) ◽  
pp. 1650146 ◽  
Author(s):  
Lijian Sun ◽  
Junhai Ma
Keyword(s):  
Supply Chain ◽  
Incomplete Information ◽  
Dynamic Pricing ◽  
Wholesale Price ◽  
Price Adjustment ◽  
Phase Portraits ◽  
Largest Lyapunov Exponent ◽  
Risk Averse ◽  
Dual Channel ◽  
Adjustment Speed

Under the industrial background of dual-channel, volatility in demand of consumers, we use the theory of bifurcations and numerical simulation tools to investigate the dynamic pricing game in a dual-channel supply chain with risk-averse behavior and incomplete information. Due to volatility of demand of consumers, we consider all the players in the supply chain are risk-averse. We assume there exist Bertrand game and Manufacturers’ Stackelberg in the chain which are closer to reality. The main objective of the paper is to investigate the complex influence of the decision parameters such as wholesale price adjustment speed, risk preference and service value on stability of the risk-averse supply chain and average utilities of all the players. We lay emphasis on the influence of chaos on average utilities of all the players which did not appear in previous studies. The dynamic phenomena, such as the bifurcation, chaos and sensitivity to initial values are analyzed by 2D bifurcation phase portraits, Double Largest Lyapunov exponent, basins of attraction and so on. The study shows that the manufacturers should slow down their wholesale price adjustment speed to get more utilities, if the manufacturers are willing to take on more risk, they will get more profits, but they must keep their wholesale prices in a certain range in order to maintain the market stability.

Impact of price adjustment speed on the stability of Bertrand–Nash equilibrium and profit of the retailers

Kybernetes ◽  
2018 ◽  
Vol 47 (8) ◽  
pp. 1494-1523
Author(s):  
Rofin T.M. ◽  
Biswajit Mahanty
Keyword(s):  
Supply Chain ◽  
Nash Equilibrium ◽  
Chaotic Dynamics ◽  
Price Adjustment ◽  
Online Retailer ◽  
Content Type ◽  
Dual Channel ◽  
Adjustment Speed ◽  
The Stability ◽  
Dual Channel Supply Chain

Purpose The purpose of this paper is to investigate the impact of price adjustment speed on the stability of Bertrand–Nash equilibrium in the context of a dual-channel supply chain competition. Design/methodology/approach The paper considers a dual-channel supply chain comprising a manufacturer, a traditional retailer and an online retailer. A two-dimensional discrete dynamical system is used to examine the Bertrand competition between the retailers. The retailers are assumed to follow bounded rational expectations. Local stability of Bertrand–Nash equilibrium is investigated with respect to the price adjustment speed. Findings As the price adjustment speed increases, the stability of Bertrand–Nash equilibrium is lost, leading to complex chaotic dynamics. The results showed that chaotic dynamics deteriorates the profit of the retailers. The authors also found that the chaos can be controlled using an adaptive adjustment mechanism and the retailers enjoy higher profit when the chaos is controlled. Practical implications This study helps retail managers to choose an appropriate price adjustment speed to maximize profit. Originality/value The heterogeneity of the retailers is not considered in the studies involving dynamics of retailer competition. This paper contributes to the literature by considering the operational difference between a traditional retailer and an online retailer, i.e. price adjustment speed. In addition, the study establishes a link between price adjustment speed and profit.

scholarly journals The Entropy Complexity of an Asymmetric Dual-Channel Supply Chain with Probabilistic Selling

Entropy ◽  
2018 ◽  
Vol 20 (7) ◽  
pp. 543 ◽  
Author(s):  
Yimin Huang ◽  
Qiuxiang Li
Keyword(s):  
Supply Chain ◽  
Stable State ◽  
Channel Structure ◽  
Flip Bifurcation ◽  
Supply Chain System ◽  
Chain System ◽  
Dual Channel ◽  
Decision Variables ◽  
The Stability ◽  
Dual Channel Supply Chain

Considering consumers’ attitudes to risks for probabilistic products and probabilistic selling, this paper develops a dynamic Stackelberg game model of the supply chain considering the asymmetric dual-channel structure. Based on entropy theory and dynamic theory, we analyze and simulate the influences of decision variables and parameters on the stability and entropy of asymmetric dual-channel supply chain systems using bifurcation, entropy diagram, the parameter plot basin, attractor, etc. The results show that decision variables and parameters have great impacts on the stability of asymmetric dual-channel supply chains; the supply chain system will enter chaos through flip bifurcation or Neimark–Sacker bifurcation with the increase of the system entropy, and thus the system is more complex and falls into a chaotic state, with its entropy increased. The stability of the system can become robust with the increase of the probability that product a becomes a probabilistic product, and it weakens with the increase of the risk preference of customers for probabilistic products and the relative bargaining power of the retailer. A manufacturer using the direct selling channel may obtain greater profit than one using traditional selling channels. Using the method of parameter adjustment and feedback control, the entropy of the supply chain system will decline, and the supply chain system will fall into a stable state. Therefore, in the actual market of probabilistic selling, the manufacturers and retailers should pay attention to the parameters and adjustment speed of prices and ensure the stability of the game process and the orderliness of the dual-channel supply chain.

scholarly journals Complexity Analysis of Pricing in a Multichannel Supply Chain with Spillovers from Online to Offline Sales

Complexity ◽  
2020 ◽  
Vol 2020 ◽  
pp. 1-17
Author(s):  
Fengxia Mai ◽  
Jianxiong Zhang ◽  
Rui Yang ◽  
Xiaojie Sun
Keyword(s):  
Supply Chain ◽  
Dynamic Pricing ◽  
Complexity Analysis ◽  
Spillover Effect ◽  
Dynamic Game ◽  
Period Doubling ◽  
Dynamic Adjustment ◽  
Adjustment Strategy ◽  
Adjustment Speed ◽  
The Stability

In recent years, many manufacturers have been selling their products to online consumers through e-tailers by adopting reselling mode and agency selling mode simultaneously. The sales from the online channels inevitably incur spillover effect to the traditional offline channels. This paper develops a dynamic pricing game model on the basis of a long-term gradient adjustment mechanism for a multichannel supply chain that consists of a manufacturer and an e-tailer and focuses on examining the impacts of spillover effect, agency fee, and adjustment speed on the stability and complexity of the dynamic game system. The results show that both a greater spillover effect and a higher agency fee can make the dynamic game system more stable, and a higher adjustment speed can destabilize the dynamic game system through period doubling bifurcation. Furthermore, it is interesting to find that the destabilization of the game system benefits the e-tailer and the supply chain while having little influence on the manufacturer, and thus the dynamic adjustment strategy may improve the supply chain efficiency.

scholarly journals The Stability and Complexity Analysis of a Low-Carbon Supply Chain Considering Fairness Concern Behavior and Sales Service

2019 ◽  
Vol 16 (15) ◽  
pp. 2711 ◽  
Author(s):  
Qiuxiang Li ◽  
Xingli Chen ◽  
Yimin Huang
Keyword(s):  
Supply Chain ◽  
Stable State ◽  
Stable Range ◽  
Direct Channel ◽  
Low Carbon ◽  
Supply Chain System ◽  
Chain System ◽  
Dual Channel ◽  
The Stability ◽  
Fairness Concern

This paper studies a low-carbon dual-channel supply chain in which a manufacturer sells products through the direct channel and traditional channel, and a retailer sells products through the traditional channel. The manufacturer considers carbon emission reduction and has fairness concern behavior. The retailer provides sales service in the traditional channel and considers fairness concern behavior. The objective of this paper is to analyze the effects of different parameter values on the price stability and utility of the supply chain system emphatically using 2D bifurcation diagram, parameter plot basin, the basins of attraction, chaos attractor and sensitivity to the initial value, etc. The results find that the retailer’s fairness concern behavior shrinks the stability of the supply chain system more than that of the manufacturer’s fairness concern behavior. The system stability region decreases with the increase of carbon emission reduction level and the retailer’s fairness concern. The customers’ preference for the direct channel decreases the stable range of the direct channel, while it enlarges the stable range of the traditional channel. The supply chain system enters into chaos through flip bifurcation with the increase of price adjustment speed. In a stable state, the manufacture improving customer’s preference for the direct channel and the retailer choosing the appropriate fairness concern level can achieve the maximum utility separately. In a chaotic state, the average utilities of the manufacturer and retailer all decline, while that of the retailer declines even more. By selecting appropriate control parameter, the low-carbon dual-channel supply chain system can return to a stable state from chaos again. The research of this paper is of great significance to price decisions of participants and supply chain operation management.

scholarly journals Complexity Dynamic Character Analysis of Retailers Based on the Share of Stochastic Demand and Service

Complexity ◽  
2017 ◽  
Vol 2017 ◽  
pp. 1-12
Author(s):  
Junhai Ma ◽  
Weiya Di ◽  
Hao Ren
Keyword(s):  
Stochastic Demand ◽  
Stable State ◽  
Service Level ◽  
Price Adjustment ◽  
Stable Region ◽  
Largest Lyapunov Exponent ◽  
Market Demand ◽  
Price Fluctuation ◽  
Adjustment Speed ◽  
The Stability

Apart from the price fluctuation, the retailers’ service level becomes another key factor that affects the market demand. This paper depicts a modified price and demand game model based on the stochastic demand and the retailer’s service level which influences the market demand decided by customers’ preference, while the market demand is stochastic in this model. We explore how the price adjustment speed affects the stability of the supply chain system with respect to service level and stochastic demand. The dynamic behavior of the system is researched by simulation and the stability domain and the bifurcation phenomenon are shown clearly. The largest Lyapunov exponent and the chaotic attractor are also given to confirm the chaotic characteristic of the system. The simulation results indicate that relatively small price adjustment speed may maintain the system at stable state. With the price adjustment speed gradually increasing, the price system gets unstable and finally becomes chaotic. This chaotic phenomenon will perturb the product market and this phenomenon should be controlled to keep the system stay in the stable region. So the chaos control is done and the chaos can be controlled completely. The conclusion makes significant contribution to the system referring to the price fluctuation based on the service level and stochastic demand.

scholarly journals The Impacts of Green Innovation Input and Channel Service in a Dual-Channel Value Chain

2019 ◽  
Vol 16 (22) ◽  
pp. 4566 ◽  
Author(s):  
Li ◽  
Chen ◽  
Huang ◽  
Gui ◽  
Liu
Keyword(s):  
Value Chain ◽  
Decision Model ◽  
Dynamic Game ◽  
Flip Bifurcation ◽  
Green Innovation ◽  
Green Products ◽  
Chaotic State ◽  
Dual Channel ◽  
The Stability ◽  
Channel Service

This paper constructs a dual-channel value chain composed of one altruistic manufacturer and one altruistic retailer, where the manufacturer makes green innovation input for green products and sells its green products to its customers through both the direct channel and the traditional channel, the retailer provides channel service for customers and sells green products through the traditional channel. We consider two scenarios in which the manufacturer and the retailer make decentralized and centralized decisions, respectively. We develop two dynamic game models for the two scenarios and analyze the dynamic behaviors of the two dynamic game models using bifurcation diagram, LLE (largest Lyapunov exponent) and attraction of basin, etc. We find that the stability region in decentralized decision model is greater than that of centralized decision, and narrow with increase of service value, green innovation input. In the decentralized decision model, the stability of the system decreases with the altruistic behavior increasing. With the price adjustment speed increasing, the dual-channel green value chain system enters into chaotic state through flip bifurcation or N-S bifurcation. In the stable state, the manufacturer and the retailer can obtain the maximum utility with the appropriate value of green innovation input. In the chaotic state, the utilities of the manufacturer and retailer are greatly affected and significantly reduced. This study will provide good guidance for sustainable development decision-making of dual-channel green value chain.

Pricing and service decision of dual-channel operations in an O2O closed-loop supply chain

2017 ◽  
Vol 117 (8) ◽  
pp. 1567-1588 ◽  
Author(s):  
Lingcheng Kong ◽  
Zhiyang Liu ◽  
Yafei Pan ◽  
Jiaping Xie ◽  
Guang Yang
Keyword(s):  
Supply Chain ◽  
Closed Loop ◽  
Wholesale Price ◽  
Revenue Sharing ◽  
Service Level ◽  
Return Rate ◽  
Transfer Payment ◽  
Channel Conflict ◽  
Content Type ◽  
Dual Channel

Purpose The online direct selling mode has been widely accepted by enterprises in the O2O era. However, the dual-channel (online/offline, forward/backward) operations of the closed-loop supply chain (CLSC) changed the relationship between manufacturers and retailers, thus resulting in channel conflict. The purpose of this paper is to take a dual-channel operations of CLSC as the research target, where a manufacturer sells a single product through a direct e-channel as well as a conventional retail channel; the retailer are responsible for collecting used products in the reverse supply chain and the manufacturer are responsible for remanufacturing. Design/methodology/approach The authors build a benchmark model of dual-channel price and service competition and take the return rate, which is considered to be related to the service level of the retailer, as the function of the service level to extend the model in the reverse SC. The authors then analyze the optimal pricing and service decision under centralization and decentralization, respectively. Finally, with the revenue-sharing factor, wholesale price and recycling price transfer payment coefficient as contract parameters, the paper also designs a revenue-sharing contract led by the manufacturer and explores in what situation the contract could realize the Pareto optimization of all players. Findings In the baseline model, the results show that optimal price and service level correlate positively in centralization; however, the relation relies on consumers’ price sensitivity in decentralization. In the extension model, the relationship between price and service level also relies on the relative value of increased service cost and remanufacturing saved cost. When the return rate correlates with the service level, a recycling transfer payment can elevate the service level and thus raise the return rate. Through analyzing the parameters in revenue-sharing contract, a point can be reached where lowering the wholesale price and raising the transfer payment coefficient will promote retailers to share revenue. Practical implications Many enterprises establish the dual-channel distribution system both online and offline, which need to understand how to resolve their channel conflict. The conflict is especially strong in CLSC with remanufacturing. The result helps the node enterprises realize the coordination of the dual-channel CLSC. Originality/value It takes into account the fact that there are two complementary relationships, such as online selling and offline delivery; used product recycling and remanufacturing. The authors optimize the strategy of product pricing and service level in order to solve channel conflict and double marginalization in the closed-loop dual-channel distribution network.

PRICING AND INVENTORY STRATEGIES FOR A TWO-STAGE DUAL-CHANNEL SUPPLY CHAIN

2012 ◽  
Vol 29 (01) ◽  
pp. 1240004 ◽  
Author(s):  
RUN H. NIU ◽  
XUAN ZHAO ◽  
IGNACIO CASTILLO ◽  
TARJA JORO
Keyword(s):  
Supply Chain ◽  
Wholesale Price ◽  
Product Line ◽  
Two Stage ◽  
Web Based ◽  
Dual Channel ◽  
Eoq Model ◽  
Joint Pricing ◽  
Dual Channel Supply Chain ◽  
Offline Channels

The Internet is becoming increasingly important as a sales channel. Thus, most large retail firms have adopted a multi-channel strategy that includes both web-based channels and pre-existing offline channels. In this paper, we consider joint pricing and inventory/production decision problems for members in a monopoly two-stage dual-channel retailer supply chain. For a dual-channel retailer, pricing in one channel will affect the demand in the other channel. This subsequently affects the retailer's replenishment (ordering) decisions, which have an impact on the producer's inventory/production plans and wholesale price decisions. It is clear then that pricing decisions and inventory/production decisions are interacting in each member of the supply chain and among the members in the chain as well. In this paper, we analyze joint pricing and inventory/production problems under three scenarios by incorporating intra-product line price interaction in the EOQ model. We show that a unique equilibrium exists under certain realistic conditions. We also provide numerical results that offer insights for pricing strategies for the dual-channel retailer supply chain and for product design for different channels.

scholarly journals Dynamic Game and Coordination Strategy of Multichannel Supply Chain Based on Brand Competition

Complexity ◽  
2019 ◽  
Vol 2019 ◽  
pp. 1-26 ◽  
Author(s):  
Junhai Ma ◽  
Fang Zhang ◽  
Binshuo Bao
Keyword(s):  
Supply Chain ◽  
Dynamic Pricing ◽  
Tracking System ◽  
Wholesale Price ◽  
Stable Region ◽  
Selling Price ◽  
Direct Channel ◽  
Channel Competition ◽  
Brand Competition ◽  
Adjustment Speed

In is very important for the corresponding author to have a linked ORCID (Open Researcher and Contributor ID) account on MTS. To register a linked ORCID account, please go to the Account Update page (http://mts.hindawi.com/update/) in our Manuscript Tracking System and after you have logged in click on the ORCID link at the top of the page. This link will take you to the ORCID website where you will be able to create an account for yourself. Once you have done so, your new ORCID will be saved in our Manuscript Tracking System automatically.”"?>this paper, two noncooperative dynamic pricing strategies are used in a supply chain. Two dynamic Stackelberg game models have been built involving both a manufacturer and a retailer assumed to be the leader in order. In the two models, the manufacturer sells national-brand (NB) product to an independent retailer or directly to consumers through a direct channel. The retailers sell a store-brand (SB) product when they sell the NB product coming from the manufacturer. Thus, there is competition both in different channels and in products with different brands. To analyze the complexity of the model, parameter bifurcation diagrams and strange attractor diagrams have been therefore plotted. The results show that the game leader has advantages when the market is stable, but it turns disadvantageous if the state falls into unstable as the game follower can quickly adjust the strategy to seize the market. The wholesale price and the direct selling price are high that they incur larger profits if the manufacturer is dominant, but it gets worse when the adjustment speed increases. While in the model where the retailer plays a dominant role, the increase in the adjustment speed is unfavorable to retailer. By controlling the total cost of the direct channel and increasing channel competition strength and brand competition strength, the manufacturers can increase their profits in the game dominated by the retailer. In addition, the stable region within the system will be narrow since the market is sensitive to the channel competition, brand competition, and advertising indifference.

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