This paper examines optimal pricing in a two-tier product and service supply chain consisting of a manufacturer and a retailer in the context of vertical competition in extended warranty in two cases: one considering the retailer’s fairness concerns and one without considering the retailer’s fairness concerns. A manufacturer-dominated product and service supply chain game-theoretic model on the Stackelberg model is developed to analyse how the level of vertical competition in extended warranty service and the intensity of a retailer’s fairness concerns influence the optimal pricing of products and extended warranties for the manufacturer and retailer. This study finds the following: (i) Two parties of the supply chain employ differential pricing strategies for extended warranties when the retailer has fairness concerns. (ii) Compared to the same pricing strategies for extended warranty service when the retailer has no fairness concerns, the increase of competition intensity of vertical extended warranty service will enlarge the price difference of extended warranty service. Meanwhile, it is the intensity of fairness concerns that determines the influences of retailer’s fairness concerns on the price difference of extended warranties. (iii) If no fairness concerns are raised, an increase in the level of vertical competition in extended warranty service would benefit both supply chain parties, rather than hurting their profit. If the retailer is fair-minded, its fairness utility increases when the intensity of the fairness concerns rises in a reasonable range and decreases when the intensity exceeds the reasonable range, but for the manufacturer, its profits will be damaged as long as the retailer raises fairness concerns.
With increasing market competition and rapid development of service economy, more and more enterprises are shifting from providing products or services to providing product-service systems (PSSs) that integrate products and services, in order to improve competitiveness and profitability. Meanwhile, consumers have strategic delayed purchasing behavior when purchasing the PSS and high requirements for service quality. This paper investigates the two-period pricing and service quality decisions of product-service supply chain (PSSC) considering consumers’ strategic behavior under decentralized and centralized scenarios. The equilibrium results are compared in two scenarios. In order to eliminate performance loss under the decentralized scenario, we design two-period dynamic contracts to coordinate the PSSC. Furthermore, numerical simulation is provided to verify the feasibility of the contracts. The following conclusions can be drawn: (1) the higher the service input-efficiency, the more beneficial for alleviating consumers’ strategic purchase behavior under two scenarios, but this mitigation effect is more obvious under the centralized scenario. (2) Compared with the centralized scenario, the service quality is lower, the two-period PSS sales prices are higher, and the two-period profit is lower under the decentralized scenario. The proportion of service valuation (accounts for the valuation of PSS) will promote the widening of the service quality gap under two scenarios, but in some cases, the service input-efficiency will weaken the promotion effect of the proportion of service valuation. (3) The design of the two-period combined contracts depends on the proportion of service valuation. When the proportion of service valuation is high, the “two-period revenue sharing + service-cost sharing” combined dynamic contract can achieve PSSC perfect coordination. However, when the proportion of service valuation is low, it is necessary to design complexity combined dynamic contract which can achieve PSSC perfect coordination.
<p style='text-indent:20px;'>Currently, the upstream software developer usually cooperates with the downstream service provider to sell software and related services to client enterprises. Furthermore, the quality of pre-sale services provided by the provider has significant impact on software sales and on the performance of IT service supply chain (ITSSC). However, the existing research on IT service supply chain management (ITSSCM) lacks attention to this issue. In this study, we consider an ITSSC with a software developer, a service provider and client enterprises. Two scenarios are discussed in this study. Our study finds that the quality of pre-sale services provided by the provider and the price of extended warranty service (EWS) provided by the developer (in centralized decision-making (CDM)) are both higher than those in decentralized decision-making (DDM); when the sensitivity of clients to the software price is lower than a certain critical value, the software sales price (in CDM) is unexpectedly higher than that in DDM; however, when it is higher than the certain value, the software sales price (in CDM) is lower than that in DDM. Due to the double marginal effect between the developer and the provider, the total profit of ITSSC (in DDM) is always lower than that in CDM. By providing a combined coordination contract based on "guiding price <inline-formula><tex-math id="M1">\begin{document}$ + $\end{document}</tex-math></inline-formula> service cost sharing <inline-formula><tex-math id="M2">\begin{document}$ + $\end{document}</tex-math></inline-formula> product revenue sharing", not only the total profit of ITSSC can be increased, but also the profit of ITSSC members can be Pareto improved.</p>
scite is a Brooklyn-based organization that helps researchers better discover and understand research articles through Smart Citations–citations that display the context of the citation and describe whether the article provides supporting or contrasting evidence. scite is used by students and researchers from around the world and is funded in part by the National Science Foundation and the National Institute on Drug Abuse of the National Institutes of Health.
hi@scite.ai
10624 S. Eastern Ave., Ste. A-614
Henderson, NV 89052, USA
Copyright © 2024 scite LLC. All rights reserved.
Made with 💙 for researchers
Part of the Research Solutions Family.