J.Q. Yang^{a, b}, H.Y. Fu^c, C. Liu^{a, b}

^a School of Economics and Business Administration, Chongqing University, Chongqing 400044, China

^b Chongqing Key Laboratory of Logistics at Chongqing University, Chongqing 400044, China

^c School of Management, Southwest University of Political Science and Law, Chongqing, 401120, China

Abstract: Aimed at the inventory competition of perishable products in a dual-channel supply chain with consideration of the delivery lead time in the online direct channel, we extend the Newsvendor model considering stock-out-based consumer switching behavior to include the delivery lead time. We examine the retailer’s optimal order quantity decision in the retail channel and the manufacturer’s optimal inventory level decision in the online direct channel, explore the manufacturer’s optimal delivery lead time decision in the online direct channel, discuss the impact of the product price and consumer switching behavior on the optimal decisions of supply chain members, and compare the optimal decisions between decentralized and centralized scenarios. The results show that, compared with the centralized scenario, at least one of the supply chain members will overstock in the decentralized scenario and that consumers in the online direct channel enjoy a shorter delivery lead time and hence better service in the decentralized scenario. Finally, we present numerical examples to analyze the impact of relevant parameters on the supply chain members’ profits and the supply chain efficiency.

Keywords:Supply chain  Dual-channel  Inventory competition  Delivery lead time  Consumer switching behavior

1. Introduction

With the rapid development of e-commerce and third-party logistics, manufacturers have increasingly introduced online direct channels alongside retail channels to sell their products. For example, in 2014, www.apple.com (and Apple Stores) accounted for 12, 18 and 43 percent of iPhone, iPad and Mac sales in the U.S, while Apple-authorized retailers (e.g., Best Buy, Radio Shack, Target and Wal-Mart) and mobile phone carriers sold 88, 82 57 percent of iPhone, iPad and Mac, respectively[1]. Due to the rapid innovation and the introduction of new versions, these electronic products become obsolete quickly. Therefore, it is unwise to stock too many products in either the online direct channel or the retail channel; as a result, either channel is likely to be out of stock. Because the product in these two channels is essentially the same, consumers have alternatives to choose between the online direct channel and the retail channel[2,3,4,5,6,7]. When the initial preferred channel is out of stock, a certain percentage of consumers will switch to the other channel[8,9]. Therefore, each dual-channel supply chain member endeavors to avoid being out of stock in its own channel and to satisfy consumers from other channel at the same time.