A Manufacturer's Optimal Quantity Discount and Return Policy through Game-Theoretic Approach Again

10.6186/IJIMS.2010.21.1.6

Shu-Hui Chang；Shih-Heng Pao

Game Theory ； Quantity Discount ； Returns Policy ； Pareto Efficiency ； Channel Coordination

International Journal of Information and Management Sciences

21：1（2010 / 03 / 01）

73 - 90

英文

This paper utilizes a three-stage game model to discuss the establishment of channel coordination with quantity discount strategy, or together with returns policy. We explore the range of participation condition under circumstances that manufacturer has attained channel coordination by purchase discount or together with returns policy. This paper finds that even retailer further asks manufacturer for return of goods, the implementation of the returns policy would not affect the expected profit of channel members and the whole channel, because the higher the return price is, the higher the wholesale price, i.e. the purchase discount will be lesser. Even buyback price exceeds a limit leads to negative purchase discount; this paper also gets the condition resulting in negative purchase discount. In addition, when purchase discount is set, the stricter the participation condition is, the lower the buy- back price that manufacturer gives to retailer. If maintenance of positive purchase discount is desired, once the stricter the participation condition for retailer given by manufacturer is, the lower the buyback price that manufacturer gives to retailer. From the participation condition, we build the optimal wholesale price that makes channel coordination and Pareto efficiency surely co-exist.

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