Designing a dual-channel supply chain network considering dependent demand and discount

Department of Industrial Engineering, Babol Noshirvani University of Technology, Babol, Iran

^* Corresponding author: paydar@nit.ac.ir

Received: 21 October 2019
Accepted: 9 July 2020

Abstract

Nowadays, organizations are faced with the growth of markets, satisfying customers’ demand and empowering in competing with rivals imposed new communication channels. Along with the rapid advancement of the Internet, many suppliers are interested in creating an electronic channel in addition to the traditional retailer channel for direct market participation. This distribution system which includes retailer channels and direct channels is called a dual-channel supply chain. This study reviews a leather supply chain network that has created a discounted online channel to expand its market share. In this study, a multi-period multi-product mathematical model is developed to maximize the profit and examine the effect of different discount schemes on demand and sales. To verify the proposed model, a real-world case study is conducted. The sensitivity analyses examined the important model parameters. The obtained results show that the responsiveness of the main retailers could be more than 95%. According to the sensitivity analysis, an appropriate discount rate is reported in the direct channel.