Title: Pricing and cooperative advertising decisions in a two-echelon dual-channel supply chain

Authors: Arash Apornak; Abbas Keramati

Addresses: School of Industrial Engineering, Islamic Azad University, South Tehran Branch, Tehran, Iran ' School of Industrial Engineering, University of Tehran, Tehran, Iran; Ted Rogers School of Information Technology Management, Ryerson University, Toronto, ON, Canada

Abstract: Developments of e-commerce lead manufacturers and retailers to open direct online channel versus traditional channel in the market. In this paper we consider a supply chain consisting of a manufacturer and a retailer evaluate the impact of price schemes and cooperative advertising mechanisms on dual-channel supply chain competition in traditional and direct online channels as its setting by using Nash equilibrium and cooperative game then find the optima value of each decision variable of the study under preferred scenarios. According to the results the value of decision variables in traditional channel is more than direct online channel in both scenario and also in profit improvement part the analyses shows both channel is sensitive to demand. The results of this study can help managers to consider the interplay between the upstream and downstream entities of a dual-channel.

Keywords: pricing; cooperative advertising; Nash equilibrium; cooperative game; two echelon supply chain.

DOI: 10.1504/IJOR.2020.110477

International Journal of Operational Research, 2020 Vol.39 No.3, pp.306 - 324

Received: 04 Apr 2017
Accepted: 03 Feb 2018

Published online: 07 May 2020 *

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