Title: Optimal decisions of a retailer-owned dual-channel supply chain with demand disruptions under different power structures

Authors: Song Huang; Shuting Chen; Hui Li

Addresses: College of Economics and Management, South China Agricultural University, Guangzhou 510642, China ' College of Economics and Management, South China Agricultural University, Guangzhou 510642, China ' College of Economics and Management, South China Agricultural University, Guangzhou 510642, China

Abstract: This paper studies the optimal restoration policy when a retailer-owned dual-channel supply chain experiences unexpected demand disruptions. We study three different supply chain power structures: the manufacturer Stackelberg (MS) game, the retailer Stackelberg (RS) game and the vertical Nash (VN) game. By defining a virtual production cost function, we establish an easy way to restore the supply chain's performance. We find that the original wholesale price is robust with demand disruptions if the disruption is mild and the disruption costs are borne by the retailer. In the VN market, the optimal adjusted wholesale price when the disruption costs are borne by the manufacturer is higher than that when the disruption costs are borne by the retailer, if and only if the demand disruption is negative. Moreover, the supply chain power structures have no impact on the robustness of the original production quantity in the decentralised dual-channel supply chain.

Keywords: dual-channel supply chain; disruption management; power structures; game theory.

DOI: 10.1504/IJWMC.2018.092370

International Journal of Wireless and Mobile Computing, 2018 Vol.14 No.3, pp.277 - 287

Received: 13 Jan 2018
Accepted: 11 Feb 2018
Published online: 16 Jun 2018 *

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