Price and Lead Time Decisions in a Dual-Channel Supply Chain with Traditional and Online Sales Channels Considering Centralized and Decentralized Conditions and Transportation Modes

Today, with the rapid growth of Information Technology, manufacturers provide their products through online direct channels to the consumers as well as the traditional physical channels. In this study, a dual channel supply chain including one manufacturer and one retailer is considered. The manufacturer can sell his products in two ways: the traditional retail channel and online direct channel. It is assumed that the manufacturer offers his product on an online channel via two different transportation modes and correspondingly two different lead times. Initially, a decentralized supply chain is considered, and then it is assumed that the manufacturer is vertically integrated with the retailer in centralized supply chain. The first model is analyzed using the Stackelberg game approach with the manufacturer as the leader, and the second model is optimized using an integrated approach. Optimal decisions of prices and delivery lead times are determined. The major contribution of this paper is existence of two online channels with two different service levels. Our numerical studies reveals that the integration and coordination of the manufacturer and the retailer is beneficial for all members of the supply chain and significantly increase the profit of the whole supply chain.