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Manufacturer warranty service outsourcing strategies in a dual‐channel supply chain
Author(s) -
Zhang Yiwen,
He Zhen,
He Shuguang,
Cai Keyuan,
Wang Dongfan
Publication year - 2020
Publication title -
international transactions in operational research
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.032
H-Index - 52
eISSN - 1475-3995
pISSN - 0969-6016
DOI - 10.1111/itor.12769
Subject(s) - warranty , outsourcing , stackelberg competition , supply chain , business , service (business) , dual (grammatical number) , service management , industrial organization , supply chain management , channel (broadcasting) , marketing , microeconomics , computer science , economics , computer network , political science , law , art , literature
Abstract Warranty management for durable products has received increasing attention in recent years. In addition to conventionally keeping warranty in‐house, more manufacturers choose to outsource warranty service to agents. This paper explores outsourcing strategies for manufacturer warranty services in a dual‐channel supply chain by which the demand‐enhancing service can be undertaken by different supply chain parties. We show the results of three alternative outsourcing strategies for manufacturers whereby (a) the retailer undertakes the service, (b) a third party undertakes the service, and (c) both the retailer and a third party undertake the service simultaneously. According to Stackelberg game theory, we build a two‐echelon supply chain model and discuss the corresponding expressions for supply chain members' equilibrium decisions. Additionally, we compare the profits of each supply chain member and derive interesting managerial insights. When the base market size is relatively large, Scenario R helps the manufacturer and the retailer reach a “win‐win” situation.