Supply Chain Model With Sales Effort In Extended Warranty Services

With the enhancement of consumer awareness of risk aversion, the extended warranty service has been paid more and more attention by the consumers. For enterprises, the extension of insurance services for the enterprise has brought new profit growth space, enterprises have the power to provide and promote the extension of security services. There have seen different extended warranty service provider in supply chain(the original factory extended warranty, retailers-own extended warranty, third-party extended warranty). As an important part in the supply chain, the retailers have great advantage in contact consumers directly. They can give some advices while the consumers choosing goods and get the feedback information. The leader in supply chain has been changed from manufacturers into retailers. At the same time, the different sales effort level can affect the demand of extended warranty service. In the role of supply chain, sales efforts will affect the decision making and profit of the enterprises and the supply chain system. Therefore, using game theory, this paper builds a Supply Chain Model with Sales Effort in Extended Warranty Service to analyze the influence of sales effort sensitivity coefficient and sales effort cost coefficient on decision variables and enterprise profit, and studies the supply chain coordination problem based on the optimal model.For model selection, this paper compares and analyzes the balanced decision-making and corporate profits under two different providers EWS models, discussing the influences of sales efforts sensitivity coefficient and cost coefficient, and analysis of the optimal model, the conclusions are as follow:(1) whether all the consumers choose to purchase extended warranty service, product price and sales effort cost coefficient is positive correlation, while EWS price, EWS quality, the sales effort level, wholesale price, product demand and the EWS demand are positive correlation with the sensitivity coefficient, and negative correlation with sales effort cost coefficient in all models. Supply chain enterprise profit and system profit are also are positive correlation with the sensitivity coefficient, and negative correlation with sales effort cost coefficient.(2) When some consumers buy EWS, the enterprises need to weigh the sales effort sensitive coefficient and sales effort cost coefficient to select the best EWS model; when all of the consumers buy EWS, all enterprises’ optimal choice for EWS model is the T model.Considering the coordination, this paper studies and compares the equilibrium decision making and enterprise profit in centralized decision-making model and decentralized decision-making model. Then, the paper studies how to use cost sharing contract and profit sharing contract to coordinate the supply chain. The following conclusions are obtained:(1) the sales effort sensitivity coefficient and the sales effort cost coefficient do have important influence on the decision variables of supply chain and enterprise profit.(2) The sensitivity coefficient of sales effort will expand the decision-making efficiency of supply chain system, on the other hand, the gap between the total profits of the system will be enlarged, and the "double margin" effect will be enlarged.(3) The cost sharing contract and profit sharing contract effectively coordinate the EWS model by finding a suitable sharing ratio.