Developing a pricing strategy and coordination in a dual-channel supply chain incorporating inventory policy and marketing considerations

Abstract

This article presents static and dynamic pricing strategies in retail and chain stores/channels with discounts and revenue sharing contracts between suppliers and chain stores to achieve maximum profitability. The demand in both channels is considered uncertain and price-dependent, and the stock-out is allowed in the chain channel. The problem investigated here is one of the complex problems of mixed-integer nonlinear programming. The model was therefore validated using GAMS software. After ensuring its validity, the problem parameters were adjusted using the Taguchi method, and the model was solved by particle swarm optimization as a meta-heuristic algorithm, and its sensitivity was then analysed on different parameters of the problem, and management insights were delineated. The results showed that the algorithm used to solve the model has acceptable quality and efficiency compared to GAMS software due to its solution time for problems with large dimensions. In addition, the gap of the objective function using the algorithm was reasonable compared to the GAMS output, demonstrating the acceptable efficiency of the algorithm.