Optimizing Channel Profit in a Retail Dual-channel Supply Chain When Considering Delivery Lead Time

Abstract

With the development of e-commerce, more and more consumers are shopping Online, which has led several traditional retailers to redesign their sales strategy to include an Online sales channel. Their Online and offline channels form dual-channel supply chains. However, consumers have to wait before receiving the products they buy. The time elapsed is called delivery lead time which is an important index in consumer’s channel choice. There are few studies in this new field with studies in dual-channel supply chain being more common. In this paper, a dual-channel supply chain in which there are one manufacturer and one retailer is studied, and the retailer has an Online and an offline channel at the same time. The supply chain is considered as a retailer-dominant Stackelberg game. The delivery lead time is introduced into the operation of the supply chain. The impact of the delivery lead time on the operation of the supply chain is analyzed in this paper. The two-part tariff contract is used to coordinate the supply chain when making the decentralized decision. Finally, the optimal decisions of the supply chain members when the delivery lead time is different are shown using numerical examples.