A Supply Chain Model with a Dual Distribution Channel Based on Consumer's Behavior Diversity in the E-market

Abstract

This paper considered a dual channel supply chain in which a manufacturer sells to a retailer as well as to consumers directly. All consumers in the market are divided into two types: time sensitive consumers (T-consumer) and price sensitive consumers (P-consumer), according to their consume preference, and each can select either the retail channel or the direct channel based on the price and the delivery lead time. The manufacturer decides the price of the direct channel and the retail decides the retail price. We develop conditions under which the manufacturer and the retailer share the market is equilibrium. Then the demand analysis as well as the two pricing regimes of the manufacturer that maximize the profits of the entire supply chain is developed. We show that the proportion of the T-consumer in the market plays important role in determining both the existence of dual channels in equilibrium and the pricing strategies of the manufacturers. Finally, we prove the condition under which the manufacturer, as well as the entire supply chain system will gain profits from adding the direct channel.