Strategic Customer Behavior with Risk Preference for a Supply Chain Management Based on Double Channel
This paper consider a supply with a manufacturer, a retailer and an independent strategic customer. Strategic customer with risk preference can buy products through double channels which are physical channel of offline and internet channel of online. We use rational expectation equilibrium related knowledge, analyze the retailer best order quantity to reach profit maximization, analyze the best quantity of products delivered in the internet channel to reach profit maximize without risk preference. We find the retailer’s maximum profit is decreasing in risk preference in the physical channel as well as manufacturer’s in the internet channel. In order to ease the profit reduction, manufacturer and retailer should reduce price and quantity in their respective channel at the normal period. This is not consistent with the fact that price is raised in the normal period.
KeywordsDouble channel Strategic customer Risk preference Supply Chain
This paper attempts to fill the gap between double channel and strategic customer. We discuss the impact of strategic customer behavior under the double channel on retailer’s and manufacturer’s profit. The strategic customer’s risk characteristic impacts inventory, price and profit under the double channel. Though our studies, we find that retailer’s inventory and profit has unique maximum in physical channel. Manufacturer’s delivery quantity in the internet channel has unique maximum, as well as profit. In addition, we find the retailer’s maximum profit is decreasing in risk preference in the physical channel as well as manufacturer’s in the internet channel.
In the future research, not only manufacturer can introduce internet channel, retailer can introduce retailer-owned internet channel. Follow research can consider the introduction of risk preference for manufacturer and retailer.
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