Research On Optimal Strategies Under The Customer-driven Search And The Discount Model

With the development of e-commerce, customer search behavior has become moreand more frequent. Since customers search, retailers lose some orders, and retailers’profits are affected. It’s a very interesting question to discuss how to deal with thecustomer search from the point of the retailer.This thesis considers a distribution system with one supplier and two retailers whohave different market demand and order goods from the supplier separately. In thissystem, we establish two models, one is the customer-driven search model the other isthe price discount model. In the first model, we use the concept of "Customer-DrivenSearch" to describe the phenomenon that when one retailer is out of stock, the localcustomers will turn to another. Under this model, we assume that the customers fromdifferent retailers both are willing to choose customer search. In the second model, as theretailer one offers a discount, some customers are willing to wait for backorder so thatretailer one can retrieve his loss. On the basis of these two models, we mainly discuss theoptimal order strategy of retailer one without considering holding cost and shortage cost.And we analysis that how retailer one should determine price discount to reduce the lossof orders, and how to determine the optimal quantity in order to maximize the expectedprofit. In the last chapter, through the numerical examples we explain some properties ofthe optimal solutions and the value ranges of parameters. At last all achievements aresummed up and some future directions are suggested. Through the study of this articlewe get the following conclusions: The optimal equilibrium solution exists. For retailers,the lower the intensity of search and the smaller of the discount, or the smaller of thediscount and the greater attraction of the discount that the discount model is morefavorable; Otherwise the higher the intensity of search and the bigger of the discount, orthe bigger of the discount and the weaker attraction of the discount that the customersearch model is more favorable.