Abstract
This paper studies the optimal restoration policy when a retailer-owned dual-channel supply chain experiences unexpected demand disruptions. We study three different supply chain power structures: the manufacturer Stackelberg (MS) game, the retailer Stackelberg (RS) game and the vertical Nash (VN) game. By defining a virtual production cost function, we establish an easy way to restore the supply chain's performance. We find that the original wholesale price is robust with demand disruptions if the disruption is mild and the disruption costs are borne by the retailer. In the VN market, the optimal adjusted wholesale price when the disruption costs are borne by the manufacturer is higher than that when the disruption costs are borne by the retailer, if and only if the demand disruption is negative. Moreover, the supply chain power structures have no impact on the robustness of the original production quantity in the decentralised dual-channel supply chain.
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