The Optimal Strategies in a Product Service Supply Chain with Product Quality and Service Level Affecting Sales

Abstract

Considering a product service supply chain (PSSC) that consists of a manufacturer and an integrator of sales and after-sales service in which the demand of product is influenced by both the product quality and service level, we set up a decision optimization model and obtain the optimal equilibrium solutions under decentralized and centralized decision-making respectively. We further incorporate a two-way cost sharing and fixed transfer payment contract to coordinate the supply chain. The conclusions show that this coordination contract can coordinate the supply chain and achieve Pareto improvement when the contract parameters under certain conditions. The effect of wholesale price on the profit of both is the key to eliminate the double marginalization effect. We find that when the influence of service level on demand becomes greater, profits of both the manufacturer and the integrator become larger.