Abstract
This paper constructed a retailer-leading supply chain system considering the extended warranty (EW) with single manufacturer and single retailer to study the influence of network externality on retailer-leading supply chain coordination. First of all, we analyzed and compared the retail price, EW price, EW quality, and the total system profit in centralized and decentralized model respectively. Then we analyzed the influence of network externality on decision variables and system profits. We found that the network externality increased the loss of decision efficiency. After that, we considered the coordination of the supply chain system with extended warranty. Finally, some numerical examples were presented for further analysis.
Highlights
In recent years, as the expansion of giant electric equipment retailers such as Gome, Suning and so forth, some retailers have more discourse power in supply chain
By comparing C model, D model with SP model, we found that the price, quantity and sales of extended warranty under two-part tariff were better than the equilibrium values under decentralized decision-making model and agreed with the optimal values under centralized decision-making model
We found that (1) Whether all consumers purchase extended warranty or not, product price, extended warranty price and quantity under the decentralized decision-making model deviated from optimal values of centralized decision-making model and the manufacturer and retailer made decisions from the point of maximizing their self-interest so that the system profit under the decentralized decision-making model was always lower than optimal values of centralized decision-making model and the differences of them increased with the increasing of the intensity of network externality μ ; (2) Under two-part tariff, the supply chain system could obtain the Pareto improvement and manufacturer only obtained retained income, while retailer could obtain higher profits; (3) Two-part tariff could perfectly coordinate the supply chain system with extended warranty
Summary
As the expansion of giant electric equipment retailers such as Gome, Suning and so forth, some retailers have more discourse power in supply chain. They pointed out that the intensity of network externality depended on the factors such as customer preferences, characteristics of consumers’ background, customer loyalties and so on After their researches, scholars carried out extensive researches and they mainly focused on topics about network externality such as price making strategy [13] [14], product development strategy [15] [16], technology licensing and decisions of compatibility [17] [18], etc. At present there is no research involving supply chain coordination for extended warranty provided by strong retailers under network externality. We have discussed how to coordinate the supply chain dominated by strong retailers who provide extended warranty under network externality
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