Channel Selection Strategy for a Retailer with Finance Constraint in a Supply Chain Based on Complex Network Theory

Abstract

This paper establishes a two-echelon supply chain consisting of one manufacturer and one retailer. We consider the retailer buys a product from the manufacturer and sells it to consumers through a store channel and an online channel. The retailer needs to bear a fixed investment cost to running its store/online channel. We discuss the impact of the fixed investment cost, the operating cost for the product, and substitutive factor between the two channels on the optimal strategy for the retailer using complex network theory. The result shows that the ratio of net surplus and the ratio of the operating cost between the two channels play a significant role in the retailer's optimal decisions. Moreover, finance constraint and the fixed investment cost are also two vital factors for the retailer to channel selection strategy. Numerical experiment shows the effectiveness of the conclusion, and some meaningful insights are generated.