The Three-echelon Supply Chain Decisions Under Retailer Dominant Considering Logistics Outsourcing

Logistics outsourcing has become a measure and trend for enterprises to compete in today’s market, and the fierce competition between enterprises makes the power from manufacturer to retailer become more common, many large retailer dominant industry groups outsource their logistics to the third-party logistics provider(3PL). How retailer dominant affects the supply chain enterprises’ decisions and performances, and how the enterprises’ decisions change to deal with the market parameters’ change, then how the enterprises’ performances change then,which are all concerned problems. The research on the supply chain under retailer dominant considering logistics outsourcing can provide a certain basis for more and more extensive retail enterprise decisions making. This paper studies the three-echelon supply chain decisions under different market environment-the linear demand market, competitive market and the closed loop market structure, and analyzes the effects of the market parameters on the supply chain enterprises’ decisions and profits.In chapter 3, the decisions of a three-echelon linear demand supply chain composed of one manufacturer, one 3PL and one dominant retailer is studied, under the circumstance that the retailer’s order quantity makes sensitivity to the manufacture’s wholesale price and the 3PL’s service price simultaneously, and the impact of the two sensitivity coefficients, the demand range and the allocation ratio of logistics cost on the decision and profits variables are analyzed. Results show that the retailer can decrease the manufacturer and 3PL prices and increase his profit, by controlling the two sensitivity coefficients. The supply chain members’ risk preference depends not only on the retailer’s pricing, but also affected by the market demand. The more logistics fee the manufacturer bear the more profits he gets, but the lower the profits the retailer and 3PL get.In chapter 4, on the basis of chapter 3, a three-echelon supply chain decision is discussed when the retailer’s order quantity also makes sensitivity to the 3PL’s service level, and the impact of the logistics investment cost, the three sensitivity coefficients, the demand range and the allocation ratio of logistics cost on the decision and profits variables are analyzed. Results show that decreasing the logistics investment cost or increasing the sensitivity coefficient of the order quantity to the logistics service level can both improve the logistics service level, make the retailer’s profit increase. Affected by the logistics service level, when the sensitivity coefficient of the order quantity to the logistics service price change, all members’ decisions changes are not only depend on the market risk, but also depend on the logistics investment cost and service cost.In chapter 5, the decisions of a three-echelon competing supply chain comprising two competing manufacturers, one 3PL and one dominant retailer is investigated,considering demands of the two substitutable product are both depend on the sale prices of itself and its competing product, the decisions between the two products are compared and the effects of market size, price sensitivity, product differentiation, and production costs on the equilibrium decisions and profits are analyzed. Results show that the product whose production cost is higher than its substitutable product, then its corresponding wholesale and retail prices are also higher than its substitutable product, yet the logistics price and ordering quantity are both lower than its substitutable product. The larger the market size or the less sensitive people to the sale price the higher the decisions and profits for all channel members. 3PL, retailer and manufacturer whose production cost is lower than the other will benefit from the fiercer price competition, manufacturer whose production cost is higher than the other will damage from it. The decrease in production cost of one manufacturer benefits 3PL, retailer and himself, but harms the competing manufacturer. Besides, change in production cost that is lower than the other has a greater effect on the profits of all members than the other. Profit for the manufacturer with higher production cost than the other is lower than that of the manufacturer with lower production cost.In chapter 6, we consider the decisions of a three-echelon closed-loop supply chain comprising one manufacturer, one 3PL who charges different forward and reverse logistics fees and one dominant retailer who is also responsible for product recovery, and analyze the impact of market size, sensitivity coefficient of consumer to selling price and forward logistics allocation ratio of logistics cost on the forward logistics decision and profits variables, consumer environmental protection consciousness, sensitivity coefficient of consumer to recovery price and reverse logistics allocation ratio of logistics cost on the reverse logistics decision and profits variables. Results show that expansion of the market size, improvement of consumer environmental protection consciousness and increase of sensitivity coefficient of consumer to recovery price all make profits for all supply chain members increase, however, the increase of sensitivity coefficient of consumer to selling price make profits for all supply chain members decrease. The more logistics fee the manufacturer bear the lower profits all the supply chain members get for both forward logistics and reverse logistics.As the fast development of e-commerce and refinement of division in modern market, the supply chain problem with dominant retailer in consideration logistics outsourcing will get more enough concern and research.