Evaluating a Pricing Model in a Two-level Supply Chain by Integrating Traditional and Modern Channels with the Return Policy

Among the issues that have recently received more attention from many researchers in the multi-channel supply chain stands the supply chain considering the omnichannel distribution channel. This study analyzes a pricing problem in a two-level supply chain consisting of a manufacturer and several retailers as well as traditional, electronic, and omnichannel. The omnichannel includes "Buy-Online-Pick-Up-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, as well as delivery time for products are developed. Additionally, it is assumed that the supply chain experiences demand leakage from channels with higher prices and longer delivery periods to channels with lower prices and shorter delivery periods. Accordingly, the present study aims to investigate and evaluate a pricing model considering the omnichannel in the case of single-period single-product and also providing a solution approach with valuable performance. Furthermore, this solution method can be applied to real problems as a helpful decision-making tool. Also, investigating the impact of various factors on the number of decision variables and the profit of the entire supply chain is part of the research objectives. 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.The results show that the two parameters of price sensitivity of demand and return sensitivity of demand have a critical impact on supply chain decision variables. These variables include the retailer's sales price, return price, delivery time, and total supply chain profit. This means that with the increase of demand return sensitivity parameter, the selling price of retails and the return price increase, and this parameter has a critical effect on the omnichannel. This research proposes an integrated approach to evaluate the impact of pricing decisions and return policies in different retail channels in the supply chain. Therefore, the results of the present study can be used as a useful guide for the operational decisions of companies in terms of simultaneous use of pricing decisions, product return policy, and delivery time. Accordingly, online retailers can make operational decisions regarding the application of the product return policy according to the presented analysis. In addition, this study creates an excellent opportunity for retailers to review their performance and make decisions about applying this policy to their business. Consequently, considering the improvement of the consumer experience in the omnichannel, this research can be a guide for consumers to use the retail integration services of the omnichannel.