Title: Pricing strategies in a risk-averse dual-channel supply chain with manufacturer services

Authors: Zhenhua Yang; Lin Huang; Yu Xia; Jianguo Liu

Addresses: School of Economics and Management, Huzhou University, No. 759, Erhuandong Road, Huzhou, China; Zhejiang Ecological Civilization Executive Leadership Academy, Huzhou, China ' School of Economics and Management, Huzhou University, No. 759, Erhuandong Road, Huzhou City, China ' School of Management, Henan University of Technology, No. 100, Lianhua Road, Gaoxin District, Zhengzhou City, China ' Institute of Accounting and Finance, Shanghai University of Finance and Economics, Lab Building, No 777 Guoding Rd., Yangpu District, Shanghai, China

Abstract: This paper studies a dual-channel supply chain consisting of one risk-averse manufacturer and one risk-averse retailer with stochastic demand. Herein, the manufacturer provides value-added services to enhance channel demand. First, the optimal pricing and service decisions of the channel members are investigated under different settings, i.e., the cooperative game, Bertrand game, and manufacturer Stackelberg (MS) game models. Second, the effects of channel members' risk aversion on optimal channel prices and expected utilities are analysed under the assumption that the manufacturer service is a decision variable and an exogenous variable, respectively. Third, sensitivity analysis and numerical simulation are performed to verify our propositions consistently and seek more managerial implications. The findings suggest that the manufacturer's value-added services in their direct channel will improve the direct price while decreasing the retail price. Consumers' channel loyalty degree has a great influence on the optimal price decisions and the performance of the channel members. The direct price increases while the retail price decreases in the manufacturer's value-added services. The retailer's risk aversion has a greater influence on price decisions than that of the manufacturer.

Keywords: dual-channel supply chain; risk aversion; value-added services; Bertrand game; Stackelberg game.

DOI: 10.1504/IJADS.2024.141825

International Journal of Applied Decision Sciences, 2024 Vol.17 No.6, pp.681 - 709

Received: 30 Dec 2022
Accepted: 31 Mar 2023
Published online: 02 Oct 2024 *

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