Coordinating Dual-Channel Supply Chain Under Price Mechanism With Production Cost Disruption

Abstract

This paper studies a two-stage dual-channel supply chain consisting of one manufacturer and one traditional retailer. The manufacturer has its own online channel when he sells the product to the offline retailer. There exists a Stackelberg game between the manufacturer and the offline retailer, in which the manufacturer is the leader and the retailer is the follower. The manufacturer abandons the pricing right in the online channel and adopts the marketing strategy which the online retail price is equal to the offline one. When the supply chain is in a static (undisrupted) condition, it can obtain Pareto improvement and eventually be coordinated by a two-part-tariff contract with a one-time transfer payment. When disruptions make the manufacturer’s unit production cost change, we can obtain the retail price, the production quantity and the total supply chain profit under different disruption levels in the centralized supply chain. Then, we find that there are some certain robustness both in the manufacturer’s production quantity and in the offline retail price. When the supply chain is decentralized, we can coordinate the supply chain by changing the wholesale price according to different disruption levels. Finally, some numerical examples are presented to illustrate the results.