Universal point scheme with a platform and multiple retailers

Abstract

This paper studies the universal point scheme with multiple retailers and a platform that implements the points within a channel. First, we analysed the equilibriums of the channel under the decentralised control and the mode of lateral cost-sharing among retailers. We found that retailers are willing to set the lowest point conversion ratios under the lateral cost-sharing mode compared with the decentralised and centralised control modes. The optimal conversion ratio of a retailer under the decentralised control is greater than the one under the centralised control when the cost spillover and double marginalisation are not significant. Next, we extended the model by considering the participation of new retailer. In this dynamic channel, the impact of the cost spillover phenomenon on the channel members’ preferences is discussed. Third, we showed that the wholesale price contract for point management used in the real world has a limitation in terms of profit split. Following this, we proposed a buyback contract and showed the optimal contract parameters under which the channel’s profit could be maximised and arbitrarily split. The managerial insights we obtained shed light on how to design a universal point scheme and select channel members to achieve an all-win scenario.

KEYWORDS:

• Universal point
• third-party platform
• supply chain management
• retail supply chain
• coordinating contract
• retailer selection

Acknowledgements

The authors are grateful to the associate editor and three anonymous referees for their valuable comments on earlier versions of the paper.

Data availability statement

The authors confirm that the data supporting the findings of this study are available within the article.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 http://www.cjone.com.

2 Note that π_i(λ_i) can also be written as $(p_i-c_i)D_i\left({\lambda }_i\right)-\sum _{j=1}^N{\theta }_{ji}{p}_j{\lambda }_j{D}_j\left({\lambda }_j\right)c_i/p_i-w_i{p}_i{\lambda }_i{D}_i\left({\lambda }_i\right)$. We use Equation (1(1) $\begin{array}{rl}{\pi }_i^d\left({\lambda }_i\right)& =\left(p_i-c_i\right)D_i\left({\lambda }_i\right)-{\theta }_{ii}{c}_i{\lambda }_i{D}_i\left({\lambda }_i\right)\\ & -\sum _{j=1,j\ne i}^N\frac{{\theta }_{ji}{p}_j{\lambda }_j{D}_j\left({\lambda }_j\right)c_i}{p_i}-w_i{p}_i{\lambda }_i{D}_i\left({\lambda }_i\right)\end{array}$(1) ) which can show the sources of point cost more clearly.

3 ΔD_N+1(λ_N+1) includes the demand raised by the UPS.

Additional information

Funding

This work was supported by the National Natural Science Foundation of China [No. 71801191].

Notes on contributors

Xuehao Feng

Dr Feng Xuehao is currently an Associate Professor in Ocean College, Zhejiang University, China. He received his Bachelor and M.S. degrees from Beijing Jiaotong University, China. He received his Ph.D degree from Pusan National University, South Korea, in 2013. His research interests include supply chain management, maritime logistics optimisation, and smart port.

Baolin Wen

Mr Wen Baolin is currently a Ph.D. candidate in Ocean College, Zhejiang University, China. He received his Bachelor degree from the aforementioned university in 2021. His research interests include smart port and transportation science.

Wenming Shi

Dr Wenming Shi is a Senior Lecturer at Australian Maritime College, University of Tasmania, Australia. Her main expertise and research interests are in the fields of maritime economics, port development and maritime logistics and management. Currently, Dr Shi is an Administrative Editor of Maritime Policy & Management (MPM) and is mainly responsible for Special Issues.

Ilkyeong Moon

Dr Ilkyeong Moon is a Professor of Industrial Engineering at Seoul National University in Korea. He received his B.S. and M.S. in Industrial Engineering from Seoul National University, and Ph.D. in Operations Research from Columbia University. His research interests include supply chain management, logistics, and inventory management. He published over 140 papers in international journals. He was a former Editor-in-Chief of Journal of the Korean Institute of Industrial Engineers which is a flagship journal of Korean Institute of Industrial Engineers (KIIE). He was a president of KIIE in which he had served from 2019 to 2020. He currently serves as associate editors for several journals including European Journal of IE and Flexible Services and Manufacturing. He is a fellow of Asia Pacific Industrial Engineering and Management Society and a vice chair of WG 5.7 of IFIP.