The Supply Chain Pricing And Service Decision-making With Product Returns

With the development of E-commerce and Internet Technology, more and more enterprises start to establish online direct channel basing on E-commerce platform in order to obtain dominant position in the future market competition. The introduction of direct channel brings the opportunity to some extent. However, it will also be confronted with new challenges. One the one hand, it will lead to dis-match between the real product and consumer’s preference when consumer buys the product from the online channel, which can incur product returns. While in the off-line retailing channel, the retailer can decrease this uncertainty through Store Assistance efforts, and thus reduces the probability of product returns. It is clear that SA effort becomes an important factor for impacting market demand and competitive advantage. On the other hand, the introduction of online channel can incur competition and channel conflicts. Therefore, how to make appropriate pricing and service decision becomes an important problem for concern and solving.First of all, basing on the traditional single channel, we establish a manufacturer-retailer Stackelberg game model, investigate the optimal pricing and service decision under decentralized and centralized supply chain, and analyze the impact of dis-match degree and online market share on manufacturer, retailer and the whole supply chain through numerical example.In addition, in order to buffer the channel conflict and protect brand, we introduce the consistent pricing strategy, establish a Stackelberg game model, investigate the optimal pricing and service decision under decentralized and centralized dual-channel supply chain considering product returns, and analyze the impact of different parameter on manufacturer, retailer and the whole supply chain through numerical example.Moreover, we establish a Stackelberg game model under differential pricing strategy, investigate the optimal pricing and service decision under decentralized and centralized dual-channel supply chain considering product returns, and analyze the impact of different parameter on manufacturer, retailer and the whole supply chain through numerical example.Finally, by contrasting consistent and differential pricing strategy, we found that differential pricing strategy is superior to consistent pricing strategy when online market shares are lower, and conversely the consistent strategy is optimal. From an overall perspective, the retailer prefer more consistent strategy, the manufacturer prefer more differential strategy, and differential strategy is optimal pricing strategy for the whole supply chain.