Determining the price and refund of products in a supply chain with quality and advertising costs in a fuzzy environment
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METHODOLOGIES AND APPLICATION
Determining the price and refund of products in a supply chain with quality and advertising costs in a fuzzy environment Hossein Sharanlou1 • Ali Husseinzadeh Kashan2 • Reza Tavakkoli-Moghaddam3
Springer-Verlag GmbH Germany, part of Springer Nature 2020
Abstract In online direct selling, three effective elements, namely price, refund and quality, affect the increment (or decrement) of demand and product return. This paper considers forward and backward (i.e., return) pricing decisions under uncertainty and develops a fuzzy mathematical model based on the Stackelberg game approach utilizing the proper action and reaction between a manufacturer and a retailer. Moreover, media advertising and manufacturer’s desire for accepting massive payments made us take into account the advertising as another factor influencing the demand. By an agreement between the manufacturer and the retailer, the costs of advertising and raising the level of the product quality are shared by two agreed rates. Two numerical examples are considered and the associated results are analyzed under fuzzy and crisp conditions when customers are sensitive or insensitive to the quality of the product. It is found that incorporation of the quality factor under a fuzzy environment has a better performance compared with the case of ignoring the quality and uncertainty in the parameters. Keywords Supply chain Pricing and refund Quality Cooperative advertising Game theory Fuzzy sets
1 Introduction In online purchasing, a customer cannot definitely decide on accepting or declining the product before receiving it completely. The purchase is done by customer based on description of product information on the retailer website, which includes quality, appearance, usage etc. Factors such as commitment to the product, brand loyalty and the credit rating of the retailer have influence on the customer’s purchase. As soon as customer receives the purchased product, he/she can finalize his/her decision to whether to accept the product or return it to the retailer. The quality factor can also refer to consistency between the purchased
Communicated by V. Loia. & Ali Husseinzadeh Kashan [email protected] 1
School of Industrial Engineering, South Tehran Branch, Islamic Azad University, Tehran, Iran
2
Faculty of Industrial and Systems Engineering, Tarbiat Modares University, Tehran, Iran
3
School of Industrial Engineering, College of Engineering, University of Tehran, Tehran, Iran
product and the online product description, as well as delivery speed and service quality (Li et al. 2013). Therefore, the quality level can be viewed as a function of dependability level of the delivery services that requires the responsibility of both the retailer and manufacturer. Statistical information on direct selling business and its popularity has been provided in (Li et al. 2013). They indicated that because of the customers’ demand heterogeneity and diversity in the product and servi
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