Sale through dual channel retailing system— A mathematical approach

Abstract

This paper deals with a dual channel inventory model where capacity of the market of a particular product is uncertain. The demand rates of the traditional consumers and the online consumers are segregated from total capacity of the market. The trust vale and acceptance rate of the product by the online consumers and utility functions comprising of value of the product, trust value of the online purchasing and some costs associated with risk, traffic, opportunities, etc., determine the demand rates of the products in offline and online channel. In this model, one retailer has offline and online options to sale the products. The objective of the retailer is to find out optimal pricing, order lot size and reorder point for maximizing jointly the average expected profit from offline and online channel. A mathematical model is analyzed to find out the optimal values of variables. Finally, a numerical example is illustrated to justify the proposed model.