Optimal pricing decision in a multi-channel supply chain with a revenue-sharing contract

Zhen Song Chen, Sheng Wu, Kannan Govindan*, Xian Jia Wang, Kwai Sang Chin, Luis Martíınez

*Corresponding author for this work

Research output: Contribution to journalJournal articleResearchpeer-review

Abstract

As a significant component of supply chain management, multi-channel pricing decision has received extensive attention in recent years. Many studies have focused on single-channel pricing decision, while limited research has been done on multi-channel pricing decision with a revenue-sharing contract. This paper establishes a multi-channel optimal pricing decision model with a revenue-sharing contract (entailing a revenue apportionment and an additional reward) in the context of a cross-channel effect, consumers trust utility, and after-sales service utility, all of which play roles in increasing or reducing supply chain members’ expected profits. The results indicate that, in a bid to obtain maximum profit, manufacturer and reseller will take different measures for varying levels of differences between cross-channel effects of direct seller (D-seller) and reseller (R-seller), for different levels of consumer trust utility, and for different levels of after-sales service utility. Manufacturer and reseller both try their best to decrease the impact of sales format differences on electronic channel when the differences are small, but the action is opposite when the differences are large. In addition, manufacturer should not blindly improve the additional trust of direct-sale stores relative to reseller, but instead should increase additional reward to R-seller when manufacturer decides to improve the after-sales service of products through D-seller.

Original languageEnglish
JournalAnnals of Operations Research
Volume318
Issue number1
Pages (from-to)67-102
ISSN0254-5330
DOIs
Publication statusPublished - Nov 2022

Keywords

  • After-sales service
  • Consumer trust
  • Cross-channel effect
  • Optimal pricing decision model
  • Revenue-sharing contract

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