Short-Term and Long-Term Impacts of a Quick Response Strategy on a Dual Channel Apparel Supply Chain

Abstract

This paper studies a dual-channel apparel supply chain faced with strategic consumers and uncertain demands, where the dominant retailer decides its service level and offline price first, and the manufacturer decides the online price later on. This paper develops a framework to examine the impacts of quick response on the system’s short-term profitability and long-term stability. To make comparisons, two scenarios are considered, in which the supply chain system adopts and does not adopt quick response, respectively. The optimal decisions and profits of the firms are first analyzed in two scenarios, and dynamic game models are then developed to study the complex characteristics. Comparisons in supply chain outputs and system stability are further made between these two scenarios. The results show that the imbalance of risks in two channels affects the performance of quick response that tends to benefit the retailer more, while it benefits the manufacturer only when the return rate is extremely high and consumers care much about the purchase channels. However, quick response certainly contributes to the system stability, which not only provides a larger stable region for firms to adjust their decisions, but also makes the system less sensitive to the consumers’ valuation for the product. Along with this, it is easier for the chaotic system with quick response to restore the stability.