Pricing and Rebate Strategies in a Dual-Channel Supply Chain with Customer Returns
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DOI: 10.23977/FEMS2020.031
Author(s)
Hua Ke and Jiahui Hu
Corresponding Author
Hua Ke
ABSTRACT
This paper studies the optimal customer rebate strategy in a dual-channel supply chain, in which online customers can obtain rebates or return unsatisfactory products. We consider that providing rebates can reduce online customers’ willingness to return. Three rebate strategies are discussed: no one offering rebates, the manufacturer offering rebates and the retailer offering rebates. We investigate the impact of customer preference and rebate strategies on supply chain members’ optimal decisions and manufacturer’s performance. It is found that when the manufacturer offers rebates, wholesale price decreases as more customers prefer the online store. Through the numerical study, we find that the manufacturer can always get more profits by providing rebates.
KEYWORDS
Dual channel, Customer rebate, Customer return, Pricing, Game theory