Effects of channel encroachment on the software and service decisions in it supply chains

<p style='text-indent:20px;'>Currently, many upstream software developers not only sell software through downstream service providers, but also directly sell it to clients. However, in the field of IT service supply chain management, there is a lack of research on the channel encroachment of software developers. In this study, we consider an IT service supply chain with a software developer, a service provider and client enterprises. Clients can either purchase the software (developed by the software developer) from the provider with a high price and additional pre-sale services, or directly purchase it from the developer with a low price but without pre-sale service. After purchasing the software, the clients can also purchase the extended warranty service from the developer. The study shows that the market size occupied by the developer and the intensity of competition between the two parties will neither affect the developer's product and service pricing decisions, nor influence the total demand for software products and extended warranty services, and thus will not impact his own profit. However, these factors will impact the provider's decisions for pre-sale service quality and software sales price, thereby affecting the provider's software demand and profit, and thus impact the performance of the supply chain. In addition, as the intensity of competition between both parties increases, the provider will simultaneously choose to reduce the pre-sales service quality and the software sales price to compete with the developer. Different from conclusions of the existing research on competition, we surprisingly observe that as the sensitivity of client enterprises to the extended warranty services price increases, both parties will increase the software price to compete. The encroachment of the developer will reduce the provider's software demand and profit, and thus lead to a decline in the performance of the supply chain. Therefore, the encroachment of the developer is an act of squeezing out partners by decreasing the profit of the provider, but without affecting his own profit.</p>

Optimal replenishment, pricing and preservation technology investment policies for non-instantaneous deteriorating items under two-level trade credit policy

<p style='text-indent:20px;'>In the business world, both the supplier and the retailer accept the credit to make their business position strong, because the credit not only strengthens their business relationships but also increases the scale of their profits. In this paper, we consider an inventory model for non-instantaneous deteriorating items with price sensitive demand, time varying deterioration rate under two-level trade credit policy. Besides, to reduce deterioration rate, retailers invest some cost to prevent product degradation/decay, known as preservation technology, is also inserted. Consumption of such items within shelf life prevents to deterioration, which can be achieved by bulk sale. In order to stimulate the selling, trade-credit policy is also considered here. In the sequel, not only the supplier would offer fixed credit period to the retailer, but retailer also adopt the trade credit policy to the customers in order to promote the market competition. The retailer can accumulate revenue and interest after the customer pays for the amount of purchasing cost to the retailer until the end of the trade credit period offered by the supplier. The main objective is to determine the optimal replenishment, pricing and preservation technology investment strategies including whether or not invest in preservation technology and how much to invest in order to maximize the average profit of the system. It is proved that the optimal replenishment policy not only exists but is unique for any given selling price and preservation technology cost. An algorithm is presented to derive the optimal solutions of the model. Numerous theorems and lemmas have been inserted to obtain the optimal solution. Finally, numerical examples and managerial implications are incorporated to validate the proposed model.</p>

Open-loop equilibrium mean-variance reinsurance, new business and investment strategies with constraints

<p style='text-indent:20px;'>In this paper, we study a general mean-variance reinsurance, new business and investment problem, where the claim processes of original and new businesses are modeled by two different risk processes and the safety loadings of reinsurance and new business are different. The retention level of the insurer is constrained in <inline-formula><tex-math id="M1">\begin{document}$ [0,1] $\end{document}</tex-math></inline-formula> and the controls of new business and risky investment are required to be non-negative. This model relaxes the limitations of those in existing research. By using the projection onto the convex set controls valued in, we obtain an open-loop equilibrium reinsurance-new business-investment strategy explicitly. We also show that the obtained equilibrium strategy is the optimal one among all deterministic strategies in the sense that it yields the smallest mean-variance cost. In the case where original and new businesses are the same, the equilibrium strategy is given in closed-form and its sensitivities to safety loadings are shown by numerical examples. At last, by comparing with the case where acquiring new business is prohibited, we show that allowing writing new policies indeed improves the performance of the insurer's risk management.</p>