Joint decision on EOQ and pricing strategy of a dual channel of mixed 4 retail and e-tail comprising of single manufacturer and retailer under 5 stochastic demand

Abstract

The paper formulates a dual channel model for a two-echelon supply chain comprising of one manufacturer and one retailer for trading a single product. The manufacturer uses direct online (e-tail) channel and traditional (Brick and Mortar) retail channel to boost sell the products. A single-period news vendor type demand in the cases of integrated and Stackelbarg game approach is analyzed to obtain optimal stock level, sales prices, promotional effort and service level for both the e-tail and retail channel, and hence retailer competes with the manufacturer’s direct channel. Finally, computational results show that dual channels influence significantly the pricing strategies and effort levels of the supply chain entities, and it is always beneficial in integrated system for the members of the chain