Pricing decision problem in dual-channel supply chain based on experts’ belief degrees

Abstract

This paper considers a pricing decision problem in supply chain with traditional offline channel and e-commence online channel. In such supply chains, in face of highly changeable and unpredictable markets, for the lack of historical data, channel managers usually have to rely on belief degrees given by experienced experts to make pricing decisions. However, surveys have shown that these human estimations are generally take much wider ranges than they really take. Thus, uncertain measure is developed to deal with these human belief degrees and three uncertain programming models are employed to derive how channel members should make their pricing decisions under three power structures. Besides, analytical comparisons and numerical experiments are conducted to examine the effects of the power structures and experts’ estimations on the equilibrium prices and expected profits. It is revealed that the existence of dominant power, regardless of who holds the leadership, will hurt the efficiency of the channel by decreasing the profit of the whole supply chain. However, from the viewpoint of the individual firms, the firm gains the most profit as a leader while it gains the lowest as a follower. We also find that consumers will suffer from higher prices facing uncertain environment. The supply chain members may benefit from higher uncertainty level of their own costs, whereas the other channel members will gain less profits. Some other managerial highlights are also presented in this paper.