Store-Assistance Management for a Supply Chain with Consumer Return under Consignment Contract

In this paper, the strategy problems of pricing and store-assistance service investment are investigated for a supply chain with consumer return, where the considered supply chain under consignment contract consists of a single manufacturer and a single retailer. Firstly, we use differential equatio...

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Bibliographic Details
Published in:Mathematical problems in engineering 2017-01, Vol.2017 (2017), p.1-12
Main Authors: Wu, Zhihui, Yu, Hui, Chen, Dongyan
Format: Article
Language:English
Subjects:
Consumers
Consumption
Contracts
Control theory
Decay rate
Design
Differential equations
Expected values
Financing
Inventory
Mathematical models
Mathematical problems
Optimal control
Pricing
Product returns
Retail stores
Salvage value
Science
Strategy
Studies
Supply chains
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Summary:In this paper, the strategy problems of pricing and store-assistance service investment are investigated for a supply chain with consumer return, where the considered supply chain under consignment contract consists of a single manufacturer and a single retailer. Firstly, we use differential equation to model the evolution of store-assistance service level and depict the effect of store-assistance service level on the return rate. By applying two-stage game, both optimal pricing and store-assistance service strategies are obtained based on the presented optimal control model. Subsequently, the committed dynamic consignment price contract is designed to coordinate and improve the performance of supply chain. Finally, a numerical example is provided to illustrate the impacts of the effectiveness of store-assistance service level and decay rate on the feasible region of corresponding contract.
ISSN:1024-123X
1563-5147
DOI:10.1155/2017/4937217