Multi-Channel Supply Chain Design in B2C Electronic Commerce

  • Wei-yu Kevin Chiang
  • Dilip Chhajed
Part of the Applied Optimization book series (APOP, volume 98)


The trend of engaging in the Internet-based direct sales has raised serious awareness and attention, both in industry and in academia, to the opportunities and challenges of using both integrated and nonintegrated distribution channels simultaneously. In this chapter, we investigate the impact of the interplay between customers’ channel preference and distribution costs on the supply chain channel design for a manufacturer that can sell through a retailer and directly to consumers. We develop economic/game-theoretical models to obtain insights and implications for the channel design problem. By comparing the profitability of three types of channel distribution strategies (retail-only distribution, dual-channel distribution, and direct-only distribution) under different scenarios, we disclose the optimal supply-chain channel design from the manufacturer’s perspective. The analytical results are presented for both centralized and decentralized supply chains.


Supply Chain Wholesale Price Retail Price Retail Store Direct Channel 
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Copyright information

© Springer Science+Business Media, Inc. 2005

Authors and Affiliations

  • Wei-yu Kevin Chiang
    • 1
  • Dilip Chhajed
    • 2
  1. 1.Department of Information SystemsUniversity of Maryland, Baltimore CountyBaltimoreUSA
  2. 2.Department of Business AdministrationUniversity of IllinoisChampaignUSA

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