The Impact Of Gift Cards Selling On Pricing And Ordering Strategies In Supply Chain

Gift giving and receiving are traditions in holiday.There are three popular gifts,gift products,gift cash and gift cards.Nowadays,with the development of economy,people's demand of gifts are more and more diversified and personalized.Giving gift products incurs much deadweight loss,meanwhile,gift cash is not an appropriate choice.Due to the special character of gift cards,as a bridge that connects cash and products,gift cards are much people's gift choices.Gift givers buy gift cards first,then they give them to the gift receivers.Gift card holders have to redeem in the retailer.Also,gift cards are benefit to the supply chain.Firms in supply chain should make strategies when sell gift cards.Based on these phenomenon,we research the firms' optimal strategies in supply chain with sel ing gift cards.Firstly,we stand the view of the retailer,and develop a newsvendor model without selling gift cards as a baseline.Then,we construct two models with selling gift cards when unredeemed gift card balances belong to the retailer and the government,separately.We get the results through optimizing solution.After tha,we compare and analyze these solutions through comparative static analysis and numerical analysis.Secondly,we consider the optimal strategies with selling gift cards in supply chain.We develop Stackelberg models in three situations,which are without selling gift cards,with selling gift cards when unredeemed gift cards balances are the retailer's property,with selling gift cards when unredeemed gift cards balances are the government's property.Then we get the optimal pricing and ordering solutions according to solving method of Stackelberg model.To compare these results and investigate the effects of some parameters to these results,we use comparative static analysis and numerical analysis.Thirdly,we consider the difference between gifts and gift cards.Then we construct two models with selling gift cards when unredeemed gift card balances belong to the retailer and the government,separately.According to solving the models,we can get the joint decision on ordering,pricing and gift cards sales.In addition,we compare and analyze these solutions.In conclusion,selling gift cards is benefit to the retailer and the supply chain,does harm to the supplier.The high face value of gift card is benefit to all the firms in supply chain.The retailer and supply chain can get much profit when the retailer keeps unredeemed gift card balances,low gift card redemption is more benefit to them,but it does more harm to the supplier.When unredeemed gift card balances belong to the government,low gift card redemption is more benefit to the supplier.