Volume 56, Number 4, July-August 2022
|Page(s)||2203 - 2220|
|Published online||25 July 2022|
Product rollover and direct sales decisions in dual-channel supply chains
Department of Industrial and Information Management, National Cheng Kung University, Tainan 70101, Taiwan, R.O.C.
* Corresponding author: email@example.com
Accepted: 14 June 2022
This study investigates product rollover and direct sales decisions in a supply chain with one fashion manufacturer and one retailer when two style generations are sequentially introduced to the market over two periods. The retailer serves as the exclusive sales channel during the introductory period of a style generation. Both the retailer and manufacturer are capable of selling the old style generation in the second period. The retailer adopts dual rollover if she sells the old style generation, and single rollover if she does not. We develop a two-stage game to explore the chain members’ equilibrium decisions while accounting for the manufacturer’s cost inefficiency in direct sales and consumers’ mental account deficit. We find that the manufacturer’s cost inefficiency has double-edged effects and can offset the negative effect of consumers’ mental account deficit on the introduction of a new style generation. Furthermore, a win–win outcome can be achieved when the manufacturer with an intermediate level of cost inefficiency engages in direct sales and consumers have high valuations of the old style generation or when the manufacturer with significant cost inefficiency does not engage in direct sales.
Mathematics Subject Classification: 90B06 / 91A80
Key words: Supply chain / product rollover / fashion product / mental account deficit / manufacturer encroachment
© The authors. Published by EDP Sciences, ROADEF, SMAI 2022
This is an Open Access article distributed under the terms of the Creative Commons Attribution License (https://creativecommons.org/licenses/by/4.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
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