Supply Chain Decisions and Quantity Discount Coordination under Differentiated Logistics Services

Abstract

Abstract:

In order to optimize the pricing decisions and increase the profits of the supply chain and all the participants in a supply chain containing differentiated logistics services, a coordination strategy based on quantity discount contract is designed. Firstly, based on the utility function, the consumers’ choice behavior is analyzed and the demand function for each delivery service derived. Then, based on Stackelberg game model, the equilibrium strategies in the decentralized condition are solved and compared in the centralized condition. It is found that, in the decentralized condition, the product’s selling price is too high and the additional charge for the express delivery is too low, which hurts the consumers’ utility and decreases the supply chain’s overall profit by 25%. In order to reach the optimal performance in the centra lized- condition, a pricing strategy for the logistics service provider (LSP) is proposed based on quantity discount contract and related parameters designed. It is found that there are infinitely many quantity discount contracts which can coordinate the supply chain and improve the two parties’ profits in a certain range. In the end, a numerical study is conducted to simulate some of the coordination contracts and analyze the effect of the retailer’s bargain ability on the profits of the LSP and the retailer.

Key words: differentiated logistics services, quantity discount, supply chain coordination

SONG Jiezhen, HUANG Youfang . Supply Chain Decisions and Quantity Discount Coordination under Differentiated Logistics Services[J]. Industrial Engineering Journal .

References

［1］MENTZER J T, FLINT D J,HULT T M.Logistics service quality as a segment-customized process［J］. Journal of Marketing, 2001, 65(4):82-104.
［2］杨德礼,于江.供应链管理下节点企业与第三方物流间协同合作的量化研究［J］.中国软科学,2003(3):51-55.
YANG Deli, YU Jiang. Quantitative research on the collaboration between node enterprise and third party logistics in the SCM［J］. China soft Science magazine, 2003(3):51-55.
［3］SHAH N, BRUECKNER J K. Price and frequency competition in freight transportation［J］. Transportation Research Part A, 2012,46(6): 938-953.
［4］汪传旭,蒋良奎.运输服务供应链协调的承运人运输价格折扣策略［J］.上海海事大学学报,2010,31(3): 63-67.
WANG Chuanxu, JIANG Liangkui. Carrier transportation price discount policy for transportation service supply chain coordination［J］. Journal of Shanghai Maritime University, 2010, 31(3): 63-67.
［5］谢天帅,李军.第三方物流服务定价博弈分析［J］.系统工程学报,2008,23(6):751-758.
XIE Tianshuai, LI Jun. Pricing game analysis for thirdparty logistics service［J］. Journal of System Engineering, 2008, 23(6):751-758.
［6］吴庆,但斌.物流服务水平影响市场需变化的TPL协调合同［J］.管理科学学报,2008,11(5): 64-75.
WU Qing, DAN Bin. Third party logistics coordinating contracts with logistics service and price dependent market demand［J］.Journal of Management Science in China, 2008, 11(5): 64-75.
［7］王勇,李莉英.需求依赖服务水平和价格的外包物流协调合同［J］.系统工程学报,2013,28(6):776-785.
WANG Yong, LI Liying. Outsourcing logistics coordinating contracts with logistics service and price dependent market demand［J］.Journal of System Engineering, 2013, 28(6):776-785
［8］DAVIS, E.R. The role of logistics service quality in creating customer loyalty［D］. USA:The University of Tennessee, Knoxville, 2006.
［9］STANK T P, GOLDSBY T J, VICKERY S K, et al. Logistics service performance: estimating its influence on market share［J］. Journal of Business Logistics, 2003, 24(1):27-56.
［10］KENNETH K, BOYER G, TOMAS M Hult. Extending the supply chain: integrating operations and marketing in the online grocery industry［J］.Journal of Operations Management, 2005, 23(6):642-661.
［11］BOYACI T, RAY S. The impact of capacity costs on product differentiation in delivery time, delivery reliability, and price［J］. Production and Operations management, 2006, 15(2): 179-197.
［12］XAVIER Wauthy. Quality choice in models of vertical differentiation［J］. The Journal of Industrial Economics, 1996, 44(3): 345-353.
（上接第6页）
［14］SAVASKAN R C, BHATTACHARYA S, VAN WASSENHOVE L N. Closed-loop supply chain models with product remanufacturing［J］. Management science, 2004, 50(2): 239-252.
［15］倪明,莫露骅. 两种回收模式下废旧电子产品再制造闭环供应链模型比较研究［J］.中国软科学, 2013(8): 170-175.
NI Ming, MO Luhua. The comparative study of remanufacturing closedloop supply chain model for waste electronic products based on two recovery modes［J］. China Soft Science,2013(8):170-175.
［16］葛静燕,黄培清. 基于博弈论的闭环供应链定价策略分析［J］.系统工程学报, 2008, 23(1): 111-115.
GE Jingyan, HUANF Peiqing. Price Decision analysis for closedloop supply chain based on game theory［J］. Journal of Systems Engineering, 2008, 23(1): 111-115.
（上接第16页）
［7］陈祥锋. 资金约束供应链中贸易信用合同的决策与价值［J］. 管理科学学报，2013，16(12):13-20. 
CHEN Xiangfeng. The value of trade credit contract in capitalconstrained supply chains［J］. Journal of Management Sciences in China, 2013,16(12):13-20.
［8］JING Bing，CHEN Xiangfeng，Gangshu Cai. Equilibrium financing in a distribution channel with capital constraint［J］. Production and Operatoins Management，2012，21(6):1090-1101. 
［9］CACHON G P. The allocation of inventory risk in a supply chain:push, pull, and advance-purchase discount contracts［J］. Management Science，2004，50(2):222238.
［10］LARIVIERE M E，PORTEUS. Selling to the newsvendor:An analysis of priceonly contracts［J］. Manufacturing Service Operations Management，2001，3(4):293-305.

[1]	SHANG Chunyan, GUAN Zhimin, MI Liyang. Decision-making and Coordination of Closed-loop Supply Chain Considering Dual Behavior Preference under Government Intervention [J]. Industrial Engineering Journal, 2021, 24(1): 35-43.
[2]	PANG QingHua, ZHOU WeiMo, XIANG Min. A Coordination Model with Revenue-sharing Contract Considering Carbon Tax and Consumers' Low-carbon Preference [J]. Industrial Engineering Journal, 2020, 23(6): 75-82.
[3]	PIAO Huishu, HU Xiujing. The Coordination of Three-level Fresh Agricultural Product Supply Chain Oriented to Green and Fresh Consumption [J]. Industrial Engineering Journal, 2020, 23(4): 1-10.
[4]	HUA Junnan, DING Xianbo. Three-Level Supply Chain Coordination of Green Agricultural Products under Stochastic Demand [J]. Industrial Engineering Journal, 2020, 23(3): 51-58.
[5]	HUANG Donghong, WU Shuangsheng, LIU Lang. A Research on Emergency Supply Chain Coordination of Call Option Discount Contract under Price Randomization [J]. Industrial Engineering Journal, 2020, 23(2): 133-141.
[6]	LI Wenlong. An Interest Coordination of Double-channel Two-level Supply Chain for Fresh Agricultural Products under Contract Game [J]. Industrial Engineering Journal, 2020, 23(1): 126-133.
[7]	SHANG Chunyan, GUAN Zhimin, Mi Liyang. Buy-back Contract Supply Chain Innovation and Coordination Mechanism Based on Mean-CVaR [J]. Industrial Engineering Journal , 2019, 22(5): 43-49,67.
[8]	LU Shengwei. A Bidirectional Option Flexibility Contract for Emergency under Stochastic Price [J]. Industrial Engineering Journal , 2019, 22(1): 61-68.
[9]	GUO Xiongfei, ZHANG Tinglong. A Dual-Channel Supply Chain Coordination Study Based on Consumers' Behavior of Cross to Return [J]. Industrial Engineering Journal , 2017, 20(3): 118-124.
[10]	ZHANG Xu, ZHANG Qing. Coordination of Fresh Agricultural Supply Chain with Fairness Preference under Random Wastage [J]. Industrial Engineering Journal , 2016, 19(6): 23-32.
[11]	CHEN Zhangyue1,2, WANG Yili2, SHI Mingjun2. A Coordination Model of Remanufacturing Closed-loop Supply Chain Based on Trade Credit and Revenue Sharing [J]. Industrial Engineering Journal , 2016, 19(6): 45-50.
[12]	ZHANG Zhiyong, LV Jiaxin, SHI Yongqiang. Quality Control and Coordination in Elderly Service Supply Chain Based on Bonus and Penalty Dual Contract [J]. Industrial Engineering Journal , 2016, 19(5): 58-64.
[13]	Jian Ming, Zong Han，Li Yuan-yuan. Buy-back Contract in Garment Industry Considering #br# Out-of-season Clothes Processing Channels [J]. Industrial Engineering Journal , 2015, 18(6): 61-68.
[14]	Jian Ming, Zong Han，Lu Gong-yuan. Supply Chain Contracts Based on Price Change in Garment Industry [J]. Industrial Engineering Journal , 2015, 18(3): 10-16.
[15]	Ma Xiao-yong， Chen Liang-hua . A Research on the Mechanism of Sharing Sales Effort Cost Based on Nash Negotiation [J]. Industrial Engineering Journal , 2014, 17(5): 114-117.