Unified strategy of production, distribution and pricing in a dual-channel supply chain using leasing option

Abstract

The surge in e-commerce has significantly altered consumer shopping habits, shifting towards online purchases. This change renders the traditional single-channel supply chain insufficient, often resulting in lost profits. Consequently, many businesses now incorporate an online channel alongside their physical stores. This shift has led to the adoption of dual-channel supply chains by manufacturers, aiming to attract a broader customer base and expand market share. Leasing options are becoming increasingly popular, offering a novel method for consumers to acquire products. However, studies on dual-channel supply chains that include leasing options are scarce and typically focus on single-period pricing. This paper explores a realistic, centralised dual-channel supply chain model that encompasses manufacturing, remanufacturing, refurbishing, distribution, and storage, along with selling, leasing, and repair services. A mathematical model is developed for a multi-period environment. This model simultaneously optimises manufacturing, remanufacturing, distribution strategies, storage costs, service offerings, and pricing for both sold and leased products, considering repair services for defective items. The paper presents numerous numerical analyses to demonstrate how integrating leasing services impacts the supply chain's profitability, the effect of customer preferences on pricing strategies, and how the cost of collecting used products influences remanufacturing decisions over a set time frame.

KEYWORDS:

• Dual-channel
• supply chain
• pricing decision
• manufacturing and remanufacturing
• leasing
• cooperation

Data availability statement

Due to the commercially sensitive nature of this research, supporting data is not available.

Disclosure statement

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

Additional information

Notes on contributors

Ahmed Farouk Hamzaoui

Ahmed Farouk Hamzaoui is a PhD student at Lorraine University. He holds a master's degree in advanced industrial engineering methods from the University of Jean Monnet of Saint-Etienne and an industrial engineering degree from the national engineering school of Tunis. His research focuses on optimisation of pricing and remanufacturing strategies for dual-channel supply chains.

Sadok Turki

Sadok Turki is Associate Professor at Lorraine University (France). He received a Ph.D. degree in industrial and logistics management from University of Lorraine. His current research interests include reverse supply chains, modelling and simulation of production systems, optimisation methods and operations research, production and maintenance planning.

Nidhal Rezg

Nidhal Rezg serves at the University of Lorraine, holding a PhD in Industrial Automation from the National Institute of Applied Sciences (INSA) in Lyon, awarded in 1996. He received his accreditation to supervise research from the University of Metz in 2003. Between 1997 and 1999, he was a professor at the University of Moncton's Faculty of Engineering in New Brunswick, Canada, and served as an Associate Professor at the University of Metz until 2004, before assuming his current role as a full Professor. From October 2006 until December 2023, he led the LGIPM laboratory and has been the director and founder of UPS DITEX since 2016. His research focuses on optimising Logistic, maintenance and production policies, optimal SED control, and the application of Artificial Intelligence in simulation models. Professor Rezg has co-authored two books published by WILEY and has contributed to over 90 high-quality international journal publications. He has also authored two book chapters for Springer, supervised 28 PhD theses, 25 of which have been successfully defended, and spearheaded numerous industrial contracts with leading companies such as Dassault Systèmes, RENAULT, and DACIA. His research areas include modelling, simulation, and optimisation of stochastic processes, reliability and maintenance, Industry 4.0, and Petri nets. Marked by significant achievements in engineering, Professor Rezg is now dedicated to advancing energy efficiency and optimising logistics systems within the energy sector, through European community-supported projects. His notable founding of a new engineering school in Metz for logistics engineering underscores his dedication to education and applied research, in partnership with notable companies like Amazon, Translliances, FM Logistic, and others, addressing the industry's specific needs.