Service level, pricing strategy and firm performance in a manufacturer-giant retailer supply chain

摘要

Purpose - The purpose of this paper is to provide a framework to help the manufacturer and the giant retailer to obtain optimal service level, pricingrnstrategy, and market structure in order to maximize their respective profits.rnDesign/methodology/approach - A profit-maximization model is developed to determine the optimal service level, pricing strategy, and marketrnstructure for supply chain players.rnFindings - Using a profit-maximization model, it is demonstrated that optimal service level and pricing strategy exist under different market structuresrnin a manufacturer-giant retailer supply chain. In order to maximize their respective profits, the manufacturer and the giant retailer should cooperativelyrnemploy a coordinative market structure as an optimal market structure and a bargaining model can be utilized to implement profit sharing for thernmanufacturer and giant retailer to optimize their profits. Furthermore, it is also shown that the value of coordinative structure always increases with therncustomers' sensitivity of service, the number of customers preferring to purchase from giant retailer, and the decreasing price sensitivity.rnResearch limitations/implications - The study assumes that all supply chain players have perfect market information. However, market informationrnto the supply chain players could be incomplete and asymmetric. It is recommended that future research explores optimal service level and pricingrnstrategy under incomplete and asymmetric information setting.rnPractical implications - The paper provides a very useful model framework to study optimum service level, pricing strategy, and market structure forrnbusiness managers who are working in the manufacturer-giant retailer supply chain.rnOriginality/value - The paper fills a conceptual and practical gap for a structured analysis of the current state of knowledge about service level,rnpricing strategy, and market structures in a manufacturer-giant retailer supply chain. The paper provides practical, solid advice and business examplesrnthat demonstrate the application of the optimal strategies for supply chain management.