Pricing and Optimization Strategy in Product Service Supply Chain under Service Enhancing Product Demand

Abstract

Abstract:

In view of the situation where good service stimulates the product demand in the product service supply chain that comprises a manufacturer and a sales service integrator, we use game theory and optimization theory to establish the decision models of the manufacturer and the sales service integrator, comparatively analyze the optimal product price, service price and service level under decentralized and centralized decision models. Results show that the product price changes depend on customers' sensitivity to the service level, and the profit of the manufacturer and the sales service integrator is positively related to that sensitivity. From the perspective of cooperation between the manufacturer and the sales service integrator, we propose a cost sharing contract that leverages sales revenue compensation to improve the supply chain's profit. Finally, a numerical example is used to verify that the proposed contract can enhance the profit of the produce service supply chain and the supply chain partners can realize the Pareto improvement with the contract parameters in a certain range.

Key words: product service supply chain, service level, pricing, Pareto optimality

Dan Bin, Lou Yun, Ma Songxuan, Leng Jinzhong. Pricing and Optimization Strategy in Product Service Supply Chain under Service Enhancing Product Demand[J]. , 2017, 29(8): 211-222.

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