Store assistance and coordination of supply chains facing consumer's return

Jing Shi; Tiaojun Xiao

doi:10.3934/jimo.2016.12.991

Article Contents

2016, Volume 12, Issue 3: 991-1007. Doi: 10.3934/jimo.2016.12.991

This issue Previous Article Bounds for the spectral radius of nonnegative tensors Next Article Managing risk and disruption in production-inventory and supply chain systems: A review

Store assistance and coordination of supply chains facing consumer's return

Jing Shi^1, and
Tiaojun Xiao^1,

1.
School of Management Science and Engineering, Nanjing University, Hankou Road 22, Nanjing, Jiangsu 210093

Received: August 2014

Revised: February 2015

Published: July 2016

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Abstract

In this paper, we develop two game theoretic models of a one-manufacturer and one-retailer supply chain to study the store assistance service decision and channel coordination mechanism, where the retailer allows consumers to return mismatching product and invests on store assistance service to reduce mismatching rate. Under manufacturer Stackelberg model, we find that the players' profits increase with mismatching rate and mismatching cost if market scale is sufficiently large. We design a quantity discount-subsidy contract to coordinate the pricing and service investment behavior of the retailer and find that the coordinated unit wholesale price increases with mismatching cost and mismatching rate if both subsidy fee and service cost are sufficiently high. By comparing with the retailer Stackelberg model, we find that (i) there exists a first-mover advantage; (ii) the unit wholesale price under retailer Stackelberg is lower than that under manufacturer Stackelberg while the retail price and service level under retailer Stackelberg is higher; and (iii) the retailer's channel leadership raises product quantity if the probability of high mismatching loss is sufficiently low. We design a two-part margin-subsidy rate mechanism to coordinate the retailer Stackelberg supply chain.

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Mathematics Subject Classification: Primary: 91A10; Secondary: 90B05.

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