Joint decision on EOQ and pricing strategy of a dual channel of mixed retail and e-tail comprising of single manufacturer and retailer under stochastic demand

• Published in: Computers & industrial engineering Vol. 102; pp. 423 - 434
• Main Authors: Roy, Arpita, Sana, Shib Sankar, Chaudhuri, Kripasindhu
• Format: Journal Article
• Language: English
• Published: Elsevier Ltd 01.12.2016
• Subjects: Brick; Chains; Channels; Computer simulation; Demand; Dual-channel competition; News vendor; Pricing; Strategy; Supply chains; Two-echelon supply chain; News vendor; Two-echelon supply chain; Dual-channel competition; Pricing
• ISSN: 0360-8352; 1879-0550
• DOI: 10.1016/j.cie.2016.05.002

•Two-echelon supply chain model is studied considering dual-channel competition.•Pricing competitions are established by game theoretic approach.•Demand follows News vendor type demand is studied here.•Promotional effort and service facility are included in this model. The paper formulates a dual channel model for a two-echelon supply chain comprising of one manufacturer and one retailer for trading a single product. The manufacturer uses direct online (e-tail) channel and traditional (Brick and Mortar) retail channel to boost sell the products. A single-period news vendor type demand in the cases of integrated and Stackelbarg game approach is analyzed to obtain optimal stock level, sales prices, promotional effort and service level for both the e-tail and retail channel, and hence retailer competes with the manufacturer’s direct channel. Finally, computational results show that dual channels influence significantly the pricing strategies and effort levels of the supply chain entities, and it is always beneficial in integrated system for the members of the chain.