The Effect of O2O Retail Service Quality in Supply Chain Management

Abstract

The present study focuses on a single-vendor, single-buyer supply chain model for a single type of product with upgraded service provided to the buyer by the vendor. Vendors often increase their profit by providing a lower quality of a particular product. In this study, an advanced supply chain model is developed to increase service in the presence of an unreliable vendor and an online-to-offline (O2O) channeling system. The vendor provides lower quality items to the customer, even though they had committed to providing a certain quality product, in order to increase their profit. For more realistic results, demand is considered to be price-, quality-, and service-dependent. To advertise and sell the products, the manufacturer uses an online system, which the buyer also uses to choose and order the product, where the particular product is delivered to the customer by a third (offline) party; that is, the concept of an O2O retail channel is adopted to improve the service level of the supply chain management (SCM). To control the out-of-control state and improve the production quality, investment is used. Contrary to the literature, service is considered to be constrained, which makes the model more realistic. A classical optimization technique is used to solve the model analytically and a two-echelon supply chain model is obtained under the advanced O2O retail channel, along with optimized profit, shipment volume, selling price, ordering cost, service, back-ordered price discount, lead time, and safety factor values. Some numerical examples and a sensitivity analysis of the key parameters are provided, along with graphical representation, in order to validate the model.

A Sustainable Online-to-Offline (O2O) Retailing Strategy for a Supply Chain Management under Controllable Lead Time and Variable Demand

“…Previously, many research papers on this topic have been found. An EPQ model with rework and planned backorders for a single-stage manufacturing system were taken by Wee et al [6]. They considered an alternative inventory policy for reworking the defective products to reduce the total cost.…”

“…The stock situation can happen for both online and offline sales. Thus, backorder plays a significant role for any supply chain industry (Wee et al [6], Sarkar et al [7]). Moreover, lead time has a significant impact on any supply chain model (Sarkar and moon [8]).…”

Optimizing a Sustainable Supply Chain Inventory Model for Controllable Deterioration and Emission Rates in a Greenhouse Farm

“…They investigated an order allocation problem for a large-scale supplier selection process. Sett et al [42] developed an inventory model with price, quality of products, and service-dependent demand for the O2O model. Vishkaei et al [43] developed a retailer inventory system where the inspection system's reliabil-ity affects the percentage of defective items delivered to final customers.…”

“…10. The retailer's opportunity cost for a trade credit period is e −rM , where r denotes the interest of the opportunity cost (r > 0) [3,42]. 11.…”

An Algebraic Decision Support Model for Inventory Coordination in the Generalized n-Stage Non-Serial Supply Chain with Fixed and Linear Backorders Costs

“…Effective inventory management system to enhance the operational efficiency and competitiveness of enterprises requires the integration of the entire supply chain system [4]. The advances in information, communication technologies, and supply chain management (SCM) tools have encouraged managers to seek a full integration and close collaboration; see for instance, [5][6][7][8].…”