Optimal pricing in the presence of advance booking strategies for complementary supply chains

Abstract

Due to high competition, companies tend to improve their market share by applying different selling mechanisms such as online to offline commerce as an efficient selling mechanism in which the companies sells their products via both online and real stores. This study deals with a selling problem for two complementary supply chains including a supplier and a shopping center where the commodities are sold by a virtual and a traditional shopping center who present items as complementary shopping centers. It is assumed that market demand depends on price and service level so that they can purchase the item via both shopping centers based on their priorities. Also to analyze the reactions of the chain's partners, different games such as Nash and Stackelberg game are deemed. The aim is to obtain the closed-form solutions of the decision variables of the networks' members in order to maximize their profits where the prices of different selling periods at each echelon of the chains are the decision variables of the model. The closed-form solutions are derived and the solutions are examined by a numeric example. In following, several sensitivity analyses on key factors are performed to determine efficient ones on the variables and profits.