Research On Supply Chain Management Considering Product Allocation Strategies Under Probabilistic Selling

Probabilistic selling has become an increasingly popular marketing strategy in recent years.Probabilistic goods consist of two or more products,which may come from different suppliers,so it is inevitable to involve supply chain management when implementing probabilistic selling,but only a little literature studies the impact of probabilistic selling from the perspective of supply chain management.This paper examines influence of probabilistic selling on pricing decision,inventory decision and supply chain performance,paying special attention to the impact of the timing of product assignment to buyers of probabilistic goods.Then we explore the impact of different supply chain structure on the results.Our analysis reveals the advantages of probabilistic selling on different distribution strategies and the profit principle of probabilistic selling under demand uncertainty.It not only expands the research of probabilistic sales in the field of supply chain management,but also provides management advice for companies to use probabilistic sales more effectively.First,this paper examines the impact of probabilistic selling on the supply chain when implementing different allocation strategies in the centralized making decision.The results show that the probabilistic selling strategy can always increase the total profit of the supply chain.When the production cost is low,the early allocation strategy is better than the late allocation strategy,and when the production cost is higher,the late allocation strategy is optimal for seller.The probabilistic selling strategy with early allocation can be regarded as a more active marketing tool to expand the market,and the probabilistic selling strategy with late allocation is an effective inventory-management mechanism to handle excess inventory.Second,we study the impact of probabilistic selling when considering the game between the supplier and the retailer.We compare the results of the different strategies,including the equilibrium price,the equilibrium inventory and the total profit of the supply chain.The results show that the probabilistic selling strategy will increase the total profit of the supply chain when considering the game between the supplier and the retailer,but only in some cases the supplier and the retailer will prefer the probabilistic selling strategy simultaneously.We introduce a transfer payment contract that can change the equilibrium from the traditional selling to the probabilistic selling strategy which can create a win-win situation for the supplier and the retailer.Third,we study the impact of probabilistic selling when considering the competition between the suppliers.The results show that the advantages of the probabilistic selling strategy still exist in the situation.However,only when the cost is moderate,the equilibrium is the probabilistic selling.When the cost is too high or too low,the equilibrium is traditional selling.Therefore,the transfer payment contract is also necessary to change the equilibrium to the probabilistic selling.Finally,we compare the results of the different supply chain structures.The results show that the retailer beers the loss of the remaining inventory when considering the game between supplier and retailer.Then the retailer will adopt a relatively cautious ordering strategy.This action causes the profit of the supply chain considering the game between supplier and retailer less than the centralized decision-making.Competition between suppliers will only have a negative impact on traditional selling,because the probabilistic selling strategy can alleviate the competition between the suppliers,so the probabilistic selling strategy is more attractive in the situation.