Supply chain competition models with strategic customers considering sales effort. (October 2022) - Cai, Jianhu
Highlights: Study SC model by pairing strategic customer behavior and sales effort. Compare the SCSE mode and the RCSE mode facing strategic customers. Obtain the preferences of SC members for two sales-effort modes. Introduce the cost-sharing contract to improve the SC. Abstract: This paper introduces sales effort into the supply chain competition model when facing strategic customers. A comparison analysis is proposed to show the decision differences between two sales-effort modes, i.e., the supplier conducts sales effort and the retailer conducts sales effort. Supply chain members have different tendencies toward these two sales-effort modes at different wholesale prices. We find that there is a wholesale price region where neither the supplier nor the retailer is willing to conduct sales effort. Then, we introduce the cost-sharing contract to settle this problem. Pareto improvements can be achieved after a reasonable design of the cost-sharing contract. We also find that there exist some conditions under which both the supplier and the retailer are willing to actively conduct sales effort when the cost-sharing contract is introduced.