Dual-Channel Supply Chain Disruption Model and Analysis Under Cargo Transportation Insurance

Abstract

With the rapid development of contemporary e-commerce, there are now multiple sales channels in the supply chain. At the same time, frequent natural disasters, terrorist attacks, and economic disasters have increased the risks from disruptions in supply chain transportation. Cargo transportation insurance is an important tool for managing transportation disruptions in the supply chain. Based on a secondary supply chain, this paper analyzes an expected profit model for a manufacturer's decision, in a dual-channel supply chain, to purchase cargo transportation insurance against transport disruptions. It explores the impact of manufacturers with insurance on the expected profits in the supply chain. The research reveals that cargo transportation insurance can effectively reduce losses caused by transportation disruptions. In addition, the results show that, if transportation insurance is purchased and the possibility of transportation disruption exists in both channels, the total profit of the supply chain under decentralized decision is higher than its profit under centralized decision.

Bridging the research-practice gap in supply chain risks induced by the COVID-19

“…Aiming at the supply chain interruption, Kang et al. discussed the impact of insured manufacturers in the dual-channel supply chain on the expected profit of the supply chain interruption (Kang et al. , 2020).…”

“…Xie et al built a dual-channel supply chain for fresh food that considers consumers' low-carbon and fresh preferences (Xie et al, 2021). Aiming at the supply chain interruption, Kang et al discussed the impact of insured manufacturers in the dual-channel supply chain on the expected profit of the supply chain interruption (Kang et al, 2020). Some scholars have conducted research on the pricing strategy of dual-channel supply chain (Yi et al, 2021;Li et al, 2021a, b;Wang et al, 2021d).…”

An Omnichannel Retailing Operation for Solving Joint Inventory Replenishment Control and Dynamic Pricing Problems From the Perspective of Customer Experience

“…The results reveal that the green development of supply chain will deteriorate with the increasing risk aversion of suppliers. Kang et al investigated the effectiveness of cargo transportation insurance by establishing a supply chain interruption model of dual-channel [14]. The final results reveal that the occurrence of transportation interruption can be effectively prevented by cargo transportation insurance in supply chains.…”

Managing Supply Disruption by Horizontal Cooperation

“…Zeng et al developed multistage game-theoretical model to investigate the optimal procurement decisions for an e-retailer who can activate both drop-shipping and backup-sourcing strategies [25]. Kang et al analyzed an expected profit model for a manufacturer's decision, in a dual-channel supply chain, to purchase cargo transportation insurance against transport disruptions [26]. All of these studies consider vertical cooperation between the buyer and the supplier in managing supply disruption.…”