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Mathematical Problems in Engineering - Volume 2016 2016, Article ID 4368326, 12 pages -

Research Article

Academy of Chinese Energy Strategy, China University of Petroleum, Beijing 102249, China

China Merchants Securities, Beijing 100013, China

Guanghua School of Management, Peking University, Beijing 100871, China

College of Business Administration and Public Policy, California State University, Dominguez Hills, Carson, CA 90747, USA

Lee Business School, University of Nevada, Las Vegas, NV 89154, USA

Received 16 November 2015; Revised 30 March 2016; Accepted 31 March 2016

Academic Editor: Vladimir Turetsky

Copyright © 2016 Huihui Liu et al. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

Abstract

Many studies examine information sharing in an uncertain demand environment in a supply chain. However there is little literature on cost information sharing in a dual-channel structure consisting of a retail channel and a direct sales channel. Assuming that the retail sale cost and direct sale cost are random variables with a general distribution, the paper investigates the retailer’s choice on cost information sharing in a Bertrand competition model. Based on the equilibrium outcome of information sharing, the manufacturer’s channel choice is discussed in detail. Our paper provides several interesting conclusions. In both single- and dual-channel structures, the retailer has little motivation to share its private cost information which is verified to be valuable for the manufacturer. When the cost correlation between the two channels increases, our analyses show that the manufacturer’s profit improves. However, when channel choice is involved, the value of information could play a different role. The paper finds that a dual-channel structure can benefit the manufacturer only when the cost correlation is sufficiently low. In addition, if the cost correlation is weak, the cost fluctuation will bring out the advantage of a dual-channel structure and adding a new direct channel will help in risk pooling.





Author: Huihui Liu, Shuguang Sun, Ming Lei, G. Keong Leong, and Honghui Deng

Source: https://www.hindawi.com/



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