Pricing Decision of the Dual-Channel Supply Chain with the Manufacturer's Extended Warranty

Abstract

With the rapid development of the internet economy, many manufacturers have opened online direct sales channels and built multi-channel distribution systems. Meanwhile, both consumers and companies are paying more attention to extended warranty services. Considering a dual-channel supply chain with a manufacturer and a retailer, we assume the manufacturer provides an extended warranty in the online direct channel and investigates the decision making of the supply chain players. We develop three game models to study this problem, and they are the basic model without extended warranty (Model B), the decentralized decision model with the manufacturer’s extended warranty (Model M), and the centralized decision model with the manufacturer’s extended warranty (Model C). The Stackelberg game method is used to solve the established model, the influence of relevant parameters on the solution result is analyzed, and different models are compared. Compared with Model B, we find that the whole supply chain always be better, but the retailer would be worse in Model M. Compared with Model M, we find that the entire supply chain always performs better in Model C. Finally, we do some sensitivity analysis.