We consider a fresh product supply chain consisting of one fresh product supplier and one e-tailer. Supplier sells fresh products through e-tailer in an online market, and the e-tailer offers a full-refund return policy to loss-averse consumers and exerts a freshkeeping effort to keep the product at the optimum freshness level. By developing an analytical model, we derive the optimal price, quantity, and fresh-keeping effort jointly and verify that it is unique in the centralized setting. Based on the comparison, we demonstrate that the e-tailer's profit is greater with fresh-keeping effort than without it; therefore, the e-tailer has an incentive to engage in fresh-keeping effort. We also show that the return rate is independent of the fresh-keeping effort and consumers' loss aversion. In the decentralized setting, we first characterize the optimal wholesale price by the numerical study and then find that although the buyback contract still works, the revenue-sharing contract fails to achieve channel coordination under our model formulation. Furthermore, we develop a revenue-and cost-sharing contract that can coordinate the supply chain by designing a new contractual mechanism. Our numerical studies offer the Pareto improvement regions under the buyback and revenue-and cost-sharing contracts in which the supplier and e-tailer can earn more expected profits compared with being under wholesale price contract.

No abstract

Although online business has been growing for some time, third-party e-platforms and their impact on e-channels are an under-explored area in the literature on dual-channel supply chains. Considering different combinations of open and self-support e-platform, this paper develops dynamic game models in four dual-channel e-retail structures to study pricing strategies and channel preference for manufacturers. The results provide interesting insights. First, a manufacturer’s optimal prices vary in different e-channels. Second, e-retail prices on the self-support e-platform and open e-platform are both affected by the e-platform’s service quality and commission fee. Regardless of the channel structure, a better service quality by one e-platform leads to an increase in its own e-retail prices and forces the competing e-platform to either improve its service quality or take a lower price. Lastly and more importantly, we compare the manufacturer’s pricing strategies and performances in different dual-channel e-retail structures and identify its preferences. Specifically, if the commission fee is dynamic, we find that the manufacturer always prefers to use two e-channels provided by different e-platforms, and at least one of the e-channels is the self-support model, although it is a sub-optimal strategy.

Abstract. We consider a newsvendor game with two substitutable products which are sold by two retailers with loss-averse preferences under multiple mental accounts. The game theory is used to find the retailers' optimal order quantity. Given the order quantity of one retailer, there exists a unique optimal order quantity of another retailer. And it shows that substitution, degree of loss aversion, shortage cost, degree of substitution and salvage value have an impact on optimal order quantity. Further, the Nash equilibrium is unique in the loss-averse newsvendor game. There exists a threshold of loss aversion coefficient which the effect of loss aversion dominates the effect of competition. Numerical experiments are conducted to illustrate our results.

No abstract