Application of Distribution-Free Approach in Integrated and Dual-Channel Supply Chain Under Buyback Contract

Abstract

Customer's aim is to obtain good quality products with less effort. Nowadays, the preference of online selling is very high compare to offline selling. A dual channel supply chain model is introduced to control the quality of products with more profit using buyback contract by reducing lost sale costs. Manufacturer sells product through retail and e-tail channel, i.e., by dual channel. Demand of products depends on e-tail price, retail price, demand sensitivity, advertisement of retail channel, service level of e-tail channel, and delivery cost e-tail channel. This delivery cost has inverse impact on demand of e-tail chain. This study finds the maximum profit for each case and compares results when advertisement and service level are not present in supply chain. The model is solved for centralized and decentralized ways for RC (retail channel) using Stackelberg game policy, EC (e-tail channel), and DC (dual channel). Numerical results give that the model obtains maximum profit at optimum point. Sensitivity analysis is conducted to test the effects of key parameters of the model.