Service and Price Decisions of a Supply Chain with Optional After-Sale Service

Abstract EN

For durable products, the high quality after-sales service has been playing an increasingly important role in consumers’ purchase behaviors.

We mainly study a supply chain composed of a manufacturer and a retailer.

In a process of products sales, the manufacturer will provide a basic free quality assurance service.

On this basis, the retailer provides paid optional quality assurance service to consumers to promote sales.

Users are divided into two categories in this paper: users with no optional service and users with optional services.

We derive the equilibrium decisions between the manufacturer and the retailer under the following two cases: (i) the optional after-sales service level and the wholesale price determined by the manufacturer and the retail price determined by the retailer; (ii) the wholesale price determined by the manufacturer and the optional after-sales service level and the retail price determined by the retailer.