Optimal pricing in the presence of advance booking strategies for complementary supply chains

Abstract

With the high competition among companies, they tend to improve their market share by applying different selling mechanisms such as online to offline commerce as an efficient selling mechanism in which they sell their products via both online and real stores. This study deals with a selling problem for two complementary supply chains including a supplier and a shopping center where the commodities are sold by a virtual shopping center and a traditional one that present items as complementary shopping centers. It was assumed that market demand depended on price and service level so that the customers could purchase items via both shopping centers based on their priorities. Also, to analyze the reactions of the partners of the chain, different games were deemed. The aim was to obtain the closed-form solutions for the decision variables of the members of the network in order to maximize their profits. Prices of different selling periods at each echelon of the chains were decision variables of the model. The closed-form solutions for the decision variables were derived and the solutions were examined by a numerical example. Several sensitivity analyses of the key factors were performed to determine the efficient ones for the variables and profits.