Coordination of dual-channel supply chain with perfect product considering sales effort

Abstract

As more and more people use e-commerce for shoppi ng, manufacturers are willing to open online sales channels in order to obtain more profits. This paper discusses a dual-channel supply chain (DCSC) compos ed of a retailer with a traditional channel and a manufacturer wi th a di rec t channel. In the external environment of uncertain market demand and defective products produced by manufacturers, manufacturers make efforts to promote online products, and consumers hav e free ri der behaviour. Therefore, three game models under the leadershi p of manufac turers are established: (a) noncooperative game model; (b) coordi nation model under revenue-sharing contract; (c) coordination model under profi t-shari ng contract. The results indicate that the produc t defec t rate has a certain influenc e on channel pricing and s ale efforts. The competi tion between the actors of the dual -channel is beneficial to the consumers who pursue the price. Considering the overall profit of the DCSC, the cooperation between the manufac turer and retailer is more profitable than the channel competition, and they are more willing to make produc t sale efforts. The retailer's expec ted profit under revenuesharing contrac t is less than that under profit-sharing contract, but the total profit of coordination model is more than the latter.

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