The promising growth of e-commerce becomes the consideration of companies to expand their business channels. In the demand fulfillment, firms in a supply chain are not only doing it through face-to-face transaction (offline channel), but through their website (online channel), which is called Dual-Channel Supply Chain (DCSC). Implementing DCSC can lead to two different possible outputs, increased profit caused by enlarged market and decreased profit caused by channel conflict. DCSC problems will become more complex when the companies want to produce or maintain only enough inventory to meet immediate demands while to avoid stock-outs. The answer of this problem is channel cooperation that may bring each channel an addition to their profits. This research proposes a quantitative model to study about joint decision between pricing and inventory policy in DCSC. Two important variables, namely price and order quantity, are used to coordinate an extended DCSC structure consisting of offline, online and reseller channels. An EOQ model is added to establish the total gain of each channel and evaluate the financial performance of three scenarios observed, namely non-cooperative, semi-cooperative, and fully-cooperative scenarios. The study proposed a model to resolve the joint decision covering pricing and inventory policy in DCSC and to determine the optimum price and order quality for offline, online, and reseller channel, so that DCSC achieves maximum profit. Mathematical models are developed based on the scenarios proposed, then optimization process is done using MATLAB. The result of numerical experiments shows that fully-cooperative scenario generates the best financial performance. However, the decision about the best scenario is not an absolute decision, since it can be changed in the future regarding the changes in system conditions. The result of sensitivity analysis is done to see which parameter is critical to the total gain.

The promising growth of e-commerce becomes the consideration of companies to expand their business channels. In the demand fulfillment, firms in a supply chain are not only doing it through face-to-face transaction (offline channel), but through their website (online channel), which is called Dual-Channel Supply Chain (DCSC). Implementing DCSC can lead to two different possible outputs, increased profit caused by enlarged market and decreased profit caused by channel conflict. DCSC problems will become more complex when the companies want to produce or maintain only enough inventory to meet immediate demands while to avoid stock-outs. The answer of this problem is channel cooperation that may bring each channel an addition to their profits. This research proposes a quantitative model to study about joint decision between pricing and inventory policy in DCSC. Two important variables, namely price and order quantity, are used to coordinate an extended DCSC structure consisting of offline, online and reseller channels. An EOQ model is added to establish the total gain of each channel and evaluate the financial performance of three scenarios observed, namely non-cooperative, semi-cooperative, and fully-cooperative scenarios. The study proposed a model to resolve the joint decision covering pricing and inventory policy in DCSC and to determine the optimum price and order quality for offline, online, and reseller channel, so that DCSC achieves maximum profit. Mathematical models are developed based on the scenarios proposed, then optimization process is done using MATLAB. The result of numerical experiments shows that fully-cooperative scenario generates the best financial performance. However, the decision about the best scenario is not an absolute decision, since it can be changed in the future regarding the changes in system conditions. The result of sensitivity analysis is done to see which parameter is critical to the total gain.

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