Sustainable Trade Promotions in Case of Negative Demand Disruption in E-Commerce

Abstract

In this research, we examine the impact of a negative demand disruption on trade promotions strategy, where suppliers offer discounted prices to online supply chain retailers. To analyze the various factors that affect trade promotion strategies, we develop a Stackelberg game model to determine the optimal pricing for both manufacturers and retailers, as well as the optimal order quantity of the retailers. Our findings indicate that through an appropriate sustainable trade promotion policy, the profit of the supply chain’s members can be increased in different scenarios, including various product disposal costs and the time of product delivery. In addition to the trade promotion policies, we consider a new strategy where the manufacturer assists the retailer by paying some part of the delivery cost. Then, we compare these strategies to determine which approach leads to the highest profit for the manufacturer, retailer, and integrated supply chain under the different intensities of negative demand disruption.