A Game-Theoretic Approach for Pricing in Dual-Channel Supply Chains Considering Logistics Services

Document Type : Research Paper

Authors

1 Master's student, Department of Industrial and Systems Engineering, Faculty of Industrial and Systems Engineering, Isfahan University of Technology, Isfahan, Iran

2 Assistant professor, Department of Industrial Engineering, Faculty of Computer and Industrial Engineering, Birjand University of Technology, Birjand, Iran

3 Professor, Department of Industrial and Systems Engineering, Faculty of Industrial and Systems Engineering, Isfahan University of Technology, Isfahan 84156-83111, Iran

Abstract

In recent years, manufacturers have started selling their products online. This study examines pricing in a supply chain involving manufacturing, retailers, logistics service providers, and integrators. There are three products in this chain: two physical products from manufacturers and a service product from logistics providers. Physical products are sold online and in retail stores, with online purchases including two products. The problem is examined in four scenarios, including decentralized, manufacturer integration with retailer, functional logistics service provider integration with logistics service integrator, and a combined approach of manufacturer integration with retailer and functional logistics service provider integration with logistics service integrator. This paper introduces a novel approach by analyzing the impact of logistics supply chain members, focusing on logistics service levels and pricing. The study aims to explore how the integration of supply chain members influences the profits and service levels of other stakeholders. The results indicate that integrating two supply chain members typically lowers profits for other members. Integrating a logistics service provider and integrator can increase manufacturer profit and decrease retailer profit in certain cases, while in other cases profits remain unchanged. Similarly, integrating manufacturer and retailer usually results in decreased profits for logistics service providers and integrators. The integration of functional logistics service provider and logistics service integrator has an impact on the relationship of parameters with service level. In the decentralized scenario, if service price and service coefficients increase, service levels increase. It also increases service levels as the cost of service increases. 

Keywords

Main Subjects

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Journal of Industrial Engineering Research in Production Systems
Volume 12, Issue 24
September 2024
Pages 115-131

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