A study on the manufacturing decision-making and optimization of hybrid-channel supply chain for original equipment manufacturer

Abstract

OEM production model can achieve an effective integration of internal and external resources, and the brand owner's brand premium and manufactur-er's production advantage are the key elements of the model. When manufac-turers have both OEM channels and direct sales, the competition and coopera-tion relationships between them and the brand owners become even more complicated when the hybrid channels exist. In order to better study the operation and management of the supply chains of OEM production with the hybrid channels, the operating conditions and optimization mechanism for the supply chain of OEM production with the hybrid channels were analyzed under both a centralized and decentralized decision making scenarios through the construction of a two-stage closed-loop supply chain model in-volving both manufacturers and brand owners. We found that the existence of hybrid channel depends on the brand owner's premium level which is limited by the manufacturer's production costs. There is a section on the premium level of brand owner and the hybrid channel exists in both a decentralized and a centralized decision making paradigms. By optimizing manufacturers' production costs and brand owner's premium level, the profits of both parties involved in the supply chain of OEM production with the hybrid channels, as well as the general profit of the system, can be improved. The system profit under a centralized decision making scenario is greater than that of a decen-tralized case. If the redistribution is made for the increase in the optimized system profit by leveraging the profit stratified ratio of OEM channels of a decentralized decision making approach, then there is a possibility of achiev-ing the Pareto optimization.