Optimal Decisions in a Dual-channel Supply Chain for the Substitute Products with the Special Orders under DisruptionRisk and Brand Consideration

In this paper, a three-echelon supply chain , including two producers, distributor and retailer who produce products in different brands have been considered. Any manufacturer, has a separate channel and the exclusive retailer offers their products, which have been prepared from the distributor (exclusive market) with discount or other manufacturer. In this paper pricing decisions on substitute products with different brands on the market has been developed in exclusive and non-exclusive markets for loyal and indifferent customers. The demand for products depend on the distance from brand and ideal product prices. In this model retailer buys product from distributor, but as in the real world ,we face with disruption risk in each channel between the retailer and distributor, only some percentage of orders will be met by distributor and the remains will be done as special orders by manufacturer. The aim of this paper is maximizing the profitability of the entire supply chain, so that optimal selling price to be determined in every channel. Finally, numerical examples and sensitivity analysis have been done on them .

Keywords:

pricing , Three echelon supply chain , game theory , Disruption risk , Special order , Brand value , substitute product