Study on pricing decisions in dual-channel supply chain with value-added cost information

Abstract

In dual-channel supply chain, in order to alleviate the possibility of channel conflict, the retailer is allowed to add value to the product at a cost. In the symmetric and asymmetric information framework with value-added cost, the Stackelberg model between the two parties where the manufacturer acts axis the leader in dual-channel supply chain is proposed. The paper identifies the optimal pricing and coordination decision decisions of the retailer and manufacturer, discussing the value for two parties in condition that the retailer shares the value-added cost information with the manufacturer. It shows that the manufacturer would always benefit in the sharing the cost information. The retail would be willing to share information with the manufacturer if her cost of adding value is lower than a threshold value.1.