Conference PaperPDF Available

Integration of traditional and modern channels in a two-level supply chain with pricing decision (Persian Language)

Authors:

Abstract

One of the critical issues that have recently been considered in the supply chain is the Omni-Channel. The main idea of that is to consider customer interactions with different channels during the purchasing process. Compared to other product-oriented strategies, omni-channel is a customer-oriented approach. Especially in modern distribution channels, demand is affected by various factors including return policy. This paper addresses a pricing problem in a two-level supply chain consisting of one manufacturer and several retailers with different distribution channels including traditional, electronic, and omni-channel including Buy-Online-Pickup-In-Store and Buy-Online-Deliver-Home have been studied. In the considered case, the demand is deterministic but price-dependent, and also return policy and delivery time are considered. The problem is modeled as a nonlinear programming model to maximize the profit of the whole supply chain and solved using Gams software to analyze the results and investigate the effects of using omni-channels and return policy in supply chain.
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اتا
ا
1
،
2

3
1
اا،،ا،ا،ااا،اا
(ghazalesaboori@outlook.com)
2
اا،ا،ااا،ا،ا
(iri@alzahra.ac.irgrnas)
3
اا،ا،بااااآا،ا،
(hosseinsal@yahoo.com)
*
:

ئاااا،ا.اا 
تاا.اا،ا
،ا.،اثا
.اااأاات
ا،«----»«---ب-».ااأ
،ت،اتأ.اا
تئااااا
تاثا.ا
ت:،،،ا،
Integration of traditional and modern channels in a two-level supply chain with
pricing decision
Ghazaleh Saboori
1
, G. Reza Nasiri
2
, Hossein Salehi
3
1
M.Sc. Student,
Department of Industrial Engineering, Faculty of Engineering, Alzahra University, Tehran, Iran
(ghazalesaboori@outlook.com(
2
Assistant Professor,
Department of Industrial Engineering, Faculty of Engineering, Alzahra University, Tehran, Iran
(grnasiri@alzahra.ac.ir(
3
Ph.D. School of Industrial Engineering, South Tehran Branch, Islamic Azad University, Tehran, Iran)hosseinsal@yahoo.com(
*
Corresponding author: Gholam Reza Nasiri
ABSTRACT
One of the critical issues that have recently been considered in the supply chain is the Omni-Channel. The main idea of that is to
consider customer interactions with different channels during the purchasing process. Compared to other product-oriented
strategies, omni-channel is a customer-oriented approach. Especially in modern distribution channels, demand is affected by
various factors including return policy. This paper addresses a pricing problem in a two-level supply chain consisting of one
manufacturer and several retailers with different distribution channels including traditional, electronic, and omni-channel
including Buy-Online-Pickup-In-Store and Buy-Online-Deliver-Home have been studied. In the considered case, the demand is
deterministic but price-dependent, and also return policy and delivery time are considered. The problem is modeled as a non-
linear programming model to maximize the profit of the whole supply chain and solved using Gams software to analyze the
results and investigate the effects of using omni-channels and return policy in supply chain.
Keywords: Omni-Channel, Supply Chain Management, Pricing, Non-Linear Programming, Return Policy
24
1-تا

1
بااا،ا،
،...اااا
اا[1].اااااآ
اا«ا»ا[2].ًت
ااا،،اا،،
ئاا[3].ا[4]«----
2
»«----ب-
3
»ا
آ.ااا،اا
ا.اا اا.
ا[5]اا«----»تاا)(آثؤا.
 آ،      ،      ا 
ا،ااا.ا،اا«--
-ب-
4
»ا.ب،ً«----»اا
 اا «----»تا،ا.
ا[6]ااثثاا «----»،،
.ااا«----»اا
آ؛ا
5
اآااا،.ا
ا،«----»اثاآ،ااآ.
[7]اااا «----»اا
ا،
6
ا.اتا،اا
اااا،،اااآاا
،.اا،اا «----»اا
اااا.ا[8] «----»
ت.،ت
.ا «----»،ا
،ا.اا،ا
«----».ااا،تآ.اا
-19اتاآ[9]باااآاااا
اا.ا[10]اا
بااا.[11]ب،
ا.ااآا،اااآآ
،().اا[12]اا
.اا
7
اا؛ااا
1
Omni-channel (oc)
2
Buy-online-pickup-in-store (BOPS)
3
Order-in-store-deliver-at-home (OSDH)
4
Buy-online-deliver-home (BODH)
5
ااآ:آا،
)costhassle(
.
6
Traditional(tr)
7
Return policy
25
ات،ات.ا[13]اا«-
---
8
»اااآثأ.اا،آاااا
ااااا اااااا،آا.
ااااب.ا
اا،ا.ات،
ااااااا.تت،
ا.اا
ا،اأ.ا
أتاتا،ا
أ،ا.ائاآا.ائااآآا3
ائاا4ئااا.ا
2-أ
أاپائاا.ااا
،ا«---ب-»،اا.
،ا ا
9
«----»ا.
،ات.اا،اا
ا،ًاآاا().
اااااا[4]تا.،
تا.ا[4]ااا.
2-1ت
ü،اااا.ا
üأ.اا
üا،ا.
ü.ا
2-2
:
:
(

)،
ا
(
)
،
(

)
اپ:
: 
.
:
ا.
,
:
ااا
.
,
:
اا.
8
Buy-online-return-store (BORS)
9
اا«---ب-»با.
26
:اپ
, , :

،
ا.
, :
 ا.
:
ات.
:
ت.
:
ات
.
, :
ا.
:
اا،اا.
:
اات
،
.
: , 
اا
ا.
, ∅∅:
اا
ا.
, :
اا.
:اپ
, , :
،ا.
α:
)ا(ا.
,
,
:
،ا،.:
(
,
,
0,1)
α, α, α:
؛،ا(اا)،
:
α =
α , α =
α , α =
α
:
, , :
،
ا.
, :
ا.
:
ا.
2-3-ئاا
2-3-1-ا،ا
ا،ا
،
ت
اا.
 > 0
ااا
 > 0
ا.
اا.
ااا
 
،اااا
 
اا.
> 0


ا.ا
[4]اااا

ا،اا
 × 
اآاا
ا
×  × 
اا13(.ا)
27
=∝   +
+
 +
 

(1)
اا
«---ب-».ااااا.ا
ااآ،تا
اا.ااا ا


.ات
, ,  =∝   +
 
 +
 + 

(2)
،،اا،ت
ا،تااا.
,  , =∝    +

 
 
 + 

(3)
ا[4]،ا،
 
اا
(

)
ا


اا ااا.
ات«----»،اات
،ااااات.
[4]،ااآاا
اا
 
.
2-3-2-اا
اا،اا:ا
 = ∅ +  
(4)
اا(4)،
∅
ااآ،

اا
ا؛ا

اا،اا،.ا،
ت:
 = ∅ +  
(5)
2-3-3-
اائاات.اتت،
اااااا.ت،
اآاا.
(7)(8)ااا(9).ا
=

+
+

= ( ) + ( 

 ) + ( 

  )
(6)
Subject to:
   
(7)
  
(8)
, , , , ,  0 
(9)
3-أ
28
3-1-أ
ا(1)اا.اااا(
CONOPT
)
(
BARON
)ااا
Intel(R) Core(TM) i5- 8250U CPU @ 1.60GHz 1.80 GHz
12اا
.ااااااااابااا.أ
ا(2)أ.اا.اآ

(2)ا.ااا
 = 150
،
= 18000
،
,
= 50
،،
1
,
3
= 15
 = 200، = 190
 = 420
ث.ا
1-اپ
اپ
ا
0.75 0.8 0.75 0.02 0.02 0.7 0.5 0.8 0.5 0.2 0.2 0.2 0.01 0.01 0.02 0.02
2-أ
228.336 218.939 310.308 132.062 3.476 3.054 44.23628 34.99904 154.8993 12782.67 12085.914
3-2-
(3)ا.اااثاا
،.ا
3-
اپ
تا
بتا(تا)
20% -14.930 -14.595 -14.442 -14.533 -0.403 2.096 -33.914 -43.336 -9.832 -97.559
10% -8.369 -8.179 -8.008 -8.094 -0.201 1.146 -16.956 -21.699 -4.924 -55.834
-10% 11.018 10.762 10.263 10.489 0.230 -1.473 16.958 21.777 4.948 76.250
-20% 26.137 25.517 23.934 24.635 0.489 -3.373 33.916 43.685 9.931 183.677
15% 2.597 3.686 -4.702 -1.234 -1.237 1.343 -0.012 0.056 -0.035 -13.358
10% 1.891 2.677 -3.418 -0.899 -0.892 0.982 -0.010 0.041 -0.025 -9.711
-10% -2.996 -4.166 5.360 1.422 1.410 -1.539 0.016 -0.064 0.040 15.219
-15% -5.263 -7.257 9.370 2.496 2.445 -2.718 0.027 -0.113 0.069 26.601
50% 55.774 62.459 40.357 169.333 -1.956 -4.158 -212.670 196.442 58.874 372.430
30% 23.797 29.111 18.926 114.046 -0.978 -1.965 -85.915 97.022 28.357 165.935
10% 4.381 8.861 5.285 80.475 -0.489 -0.491 -9.829 22.781 8.380 41.744
5% 1.329 4.327 2.571 72.959 -0.259 -0.229 -0.002 11.968 4.308 18.304
20% 0.017 -0.152 -0.050 -0.092 0.374 -2.358 0.320 -1.077 -0.076 -0.611
10% 0.087 -0.076 -0.025 -0.046 0.173 -1.179 -0.307 -0.433 -0.017 -0.308
-10% -0.008 0.076 0.027 0.047 -0.173 1.146 -0.158 0.530 0.043 0.313
-20% -0.015 0.152 0.054 0.095 -0.345 2.325 -0.316 1.064 0.266 0.632
20% 0.066 -0.014 0.071 0.036 2.273 -1.375 0.306 -0.323 0.150 0.529
10% 0.032 -0.006 0.033 0.017 1.122 -0.688 0.151 -0.155 0.076 0.261
-10% -0.032 0.005 -0.033 -0.017 -1.122 0.655 -0.148 0.131 -0.067 -0.254
-20% -0.064 0.007 -0.063 -0.034 -2.244 1.343 -0.292 0.246 -0.129 -0.501
50% -0.092 -0.272 -0.199 -41.555 0 0 0.001 -1.569 -0.355 43.030
30% -0.090 -0.265 -0.194 -40.522 0 0 0.001 -1.531 -0.346 25.453
10% -0.080 -0.236 -0.172 -36.041 0 0 0.001 -1.361 -0.308 7.956
5% -0.069 -0.202 -0.148 -30.912 0 0 0.000 -1.166 -0.264 3.676
50% -0.021 -0.062 -0.045 -9.518 0 0 0.002 -0.361 -0.082 0.189
30% -0.013 -0.037 -0.027 -5.711 0 0 0.000 -0.215 -0.049 0.102
10% -0.004 -0.012 -0.009 -1.904 0 0 0.001 -0.073 -0.016 0.030
5% -0.002 -0.006 -0.005 -0.952 0 0 0.001 -0.038 -0.008 0.015
ج(2)،76/5اااا
.اثج(3)ا،



ثا.ا20ااا
184اا،34اا،44ااا10
.ااا50ااا372



oc


1
2




1
2
3









,, 
, oc
,
1, 2
, 
e, oc
1, 2, 3









29
؛اثاااا
ااااا،ااا
.ااا.ا
4-
ااا.ا
ا اتاثا  اا.اا ت 
اا.اااثا،ت،
ااا،آث
اا.أآااا
.تآثاآتا
ا.
ا
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Article
Full-text available
Objective: In this research, the analysis of a pricing problem in a two-level supply chain consisting of a manufacturer and several retailers as well as traditional, electronic, and omni-channels including "Buy-Online-PickUp in -Store", "Buy-Online-Deliver-to-Home", and "Order-in-Store-Deliver-to-Home" has been studied. In addition, a demand function dependent on product price and return policy in electronic channel, as well as delivery times for products is developed. Accordingly, the aim of the present study is to investigate and evaluate a pricing model considering various distribution channels in a single-period single-product environment and to provide a solution approach with valuable performance that can be used in real problems as a decision-making tool. Furthermore, investigating the impact of various factors on the number of decision variables and the profit of the entire supply chain is one of the research objectives. Methods: The problem is formulated as a non-linear mathematical programming model and coded and implemented using GAMS software. Furthermore, several numerical examples have been presented to investigate the effect of changes in some parameters on the values of decision variables, retailers' demand, and the total profit of the supply chain. Results: The results show that the two parameters of price sensitivity of demand and return sensitivity of demand have a critical impact on decision variables including the retailer's sales price, return price, delivery time, and profit of the entire supply chain.
Article
Full-text available
Global retail industry players have witnessed a grave scenario due to the impact of the COVID-19 pandemic. The pandemic has changed the way shoppers think, manifested in the decelerating footfall and increasing threat for traditional brick and mortar stores. The strategy of switching over to omnichannel seemed to have provided the needed relief to traditional retailers and manufacturers in the consumer goods industry. However, a robust omnichannel product assortment model requires integrating channels and remodeling managers’ roles to provide consumer experience and satisfaction and maximize profitability across all touchpoints with minor disruptions. The paper formulates and simulates an omnichannel data-driven fulfillment analytical model to analyze customers’ product mix and manage assortment accordingly. Further, an optimization model that maximizes revenue and profitability is formulated as a suggestive framework with strategies for the current scenario. The paper is helpful for marketing researchers and retail planners for omnichannel assortment management.
Article
Full-text available
This study proposes a BOPS (buy online and pick up in store) model for a two-echelon supply chain, considering the product return risk to reach an equilibrium result of two omni-channel integration modes, managed by the manufacturer or the retailer, respectively. Furthermore, this study analyzes the impacts of the service cost coefficient and the consumer loyalty of the offline channel on the optimal price, service decision, and profit of different integration modes. This study also compares the profits of enterprises under centralized and decentralized decisions. The results show that centralized decision making can improve the service level of the SA (Store Assistance) effort and the sustainable performance of the supply chain. Whether the BOPS channel is managed by the manufacturer or retailer, the service cost, the product return rate, and the offline channel consumer loyalty have an impact on the decision of product sale price, wholesale price, and SA effort service level. Offline customer loyalty is less sensitive in the BOPS channel managed by the retailer than that managed by the manufacturer. It is suitable for the manufacturer to manage the BOPS channel when offline customer loyalty is low. Otherwise, it is appropriate for the retailer to manage the BOPS channel. The profit of the supply chain under the decentralized decision is less than that under the centralized decision. When executing a wholesale price contract, different omni-channel integration modes can alleviate the double marginalization effect. It can fully coordinate the supply chain members, motivate retailers to improve the service level of the SA effort, and realize Pareto improvement to support supply chain sustainability.
Article
Full-text available
Uncertainty in demand and high online return rates tend to generate a large inventory backlog after a hot selling season. Some well-known companies such as Burberry and H&M choose to burn these backlogs, which is very unfavorable to the sustainable development of enterprises and society. The omnichannel BOPS (Buy Online and Pickup in Store) provides consumers with a new and convenient choice of purchasing channels. Considering the probability of online return, we build expected profit models for retailers before and after opening a BOPS channel based on consumer surplus and purchase ratio via an online channel, store channel, and BOPS channel. Then, we prove the existence of optimal solutions and obtain the joint optimization decision on pricing and ordering. The results show that, under certain conditions, when the proportion of online channel buyers increases, the retailers’ optimal decision before opening a BOPS channel is to reduce the price and increase the order quantity, and the retailers’ optimal decision after opening a BOPS channel is to simultaneously reduce the price and the order quantity. Whether or not a BOPS channel is opened, when the purchase proportion of store channel increases, the optimal decision of retailers is to increase the price and order quantity at the same time. Furthermore, when the online return rate, the cost of online shopping, the inconvenient cost of the store channel, and the inconvenience of the BOPS channel relative to store channel increase, the optimal decision of retailers is to simultaneously reduce the price and order quantity. Moreover, when the maximum psychological value of the product increases, the optimal decision is to reduce the order quantity while increasing the price. In addition, the opening of a BOPS channel increases optimal price, optimal order quantity, and maximum expected profit.
Article
Omni-channel (OC) retailing strategy provides consumers with seamless shopping experience by integrating different sales channels. In this study, we formulate a price and delivery lead time (DLT) dependent demand function for an omni-channel retailer (OCR) that provides integrated fulfillment services including buy-online-pick-up-in-store (BOPS) and order-in-store-deliver-to-home (OSDH) services. To investigate the extent of OC retailing success and its effects on the pre-existing retailing business models, we examine a dynamic competition between traditional, online, and OC retailing business models through a Nash-Stackelberg game. Our study also addresses the demand uncertainty as a multiplicative variable to the market potential of a product. To hedge against demand uncertainty, due to lack of perfect knowledge about the demand probability distribution, we construct a data-driven ambiguity set for candidate distributions based on the Wasserstein metric, which is utilized to quantify the distances between chosen distributions and the empirical distribution derived from the available data. In this case, part of the problem adopts a distributionally robust Nash equilibrium to find the optimal retailers’ decisions. The obtained results demonstrate the potential OC retailing functionality in terms of demand attraction and profitability. In addition, our results showed that utilizing the distributionally robust approach would lead to shorter DLT and higher sales prices compared to the deterministic demand environment. Interestingly, the pre-existing retailers’ sales prices under demand uncertainty can be higher than the situation under deterministic demand, while they are less than the sales prices before OCR entrance to the market. Therefore, there is no price inflation in the market in the presence of OCR.
Article
Omni-channel retailing has become increasingly popular among retailers. Thus, whether it is profitable to implement omni-channel operations is regarded as an important question for retailers. In this paper, omni-channel strategies for a fresh produce retailer is investigated in consideration of both fresh produce losses (natural losses and extra losses in-store) and customer types (traditional and online). We analyse the effectiveness of the omni-channel operation by comparing the equilibrium profits and consumer surpluses of three cases: store channel only, buy-online-deliver-to-home (BODH), and buy-online-pick-up-in-store (BOPS). The results show that omni-channel operation will be profitable and more effective when selling fresh produce with a higher loss rate. When the proportion of online customers is higher, omni-channel operation not only improves the retailer’s profits but also increases the consumer surplus. In addition, the BOPS mode can be more profitable than the BODH mode when the cost for home delivery is relatively high, and interestingly, the advantage of the BOPS mode will be smaller with a lower extra loss rate in-store.
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In light of the complex customer behaviour and customer journeys in omnichannel retailing, this study aims to investigate customer co-creation behaviour, customer response and customer experiential values as critical aspects of the customer journey, and examine their impact on the level of customer journey satisfaction. The results confirmed the significance of all factors, except information seeking and arousal, in all phases and exploration in the post-purchase phase, on customer journey satisfaction. For a further examination, this study classified the participants into three different segments according to their journey pattern and scrutinised whether the impact of the three predictors of customer journey satisfaction varied across customer segments. The analysis showed that customer segments were fragmented. The impact of customer co-creation behaviour, customer response and customer experiential values on customer journey satisfaction varied across the three customer segments. A heatmap highlighted the most influential factors of each customer segment. The study yielded several theoretical contributions and insights into omnichannel customers for managers.
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Many retailers have recently implemented buy online and pick up in store (BOPS) by integrating their online and offline channels. In this paper, considering a retailer who sells products through both online and offline channels, we develop a theoretical model to study the effects of BOPS adoption. Using our model, we first analyze how adoption of BOPS affects a retailer’s optimal prices, total demand and profit under consistent and inconsistent pricing strategies where a retailer employs the same pricing strategy both before and after BOPS implementation. We then conduct a comparative analysis of the two pricing strategies, discussing which one is most profitable to the retailer. Subsequently, we analyze the scenario where a retailer uses consistent pricing before BOPS adoption and inconsistent pricing afterwards and the scenario where a retailer uses inconsistent pricing before BOPS adoption and consistent pricing afterwards. We conduct numerical studies to obtain insights on when BOPS is most advantageous and which pricing strategy is better to use. Our study results show that BOPS is not always beneficial to the retailer, depending on the unit operating cost and customer hassle cost in the BOPS channel and the cross-selling profit. We also identify under what conditions a retailer is better off under different scenarios. Moreover, we find that BOPS is more beneficial to the retailer under inconsistent pricing especially when the unit operating cost in the BOPS channel is lower.
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A buy-online-and-return-in-store (BORS) service is an important omnichannel strategy that can be commonly observed in practice. In this study, we explore the BORS adoption strategy and its influence from a competitive perspective. Specifically, we consider two supply chains selling a product in the same market. Each supply chain consists of one supplier and one retailer who operate online and store channels. We find that consumers can return unwanted products to the retailer’s online channel if BORS is unavailable or to the retailer’s either store if BORS is available. In our study, monopolistic (i.e., integration scenario) and competitive environments are considered and numerical analysis is presented. Results reveal that in a monopolistic environment BORS may hurt retailers in certain situations and cause them not to adopt this strategy. However, competitive environments can make both types of retailers prefer to offer BORS in nearly all conditions. In this case, BORS can benefit both supply chains and their members. Moreover, increasing salvage values of the returned product and the proportion of the returned products that need be handled by suppliers can further enhance BORS profitability.