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Quick Response in a Dual-channel Supply Chain with Strategic Consumers

We consider the quick response (QR) in a dual-channel supply chain in which a manufacturer sells products to strategic consumers through both its own direct channel and a retailer. The strategic consumers have the options to purchase early in the full-price period or delay the purchasing until the clearance period. With QR, the retailer could start a QR order and the manufacturer could start a QR production after the uncertain demand is realized. We develop a static game model to characterize the equilibrium decisions for each channel and investigate the impacts of QR on the decisions and profits of the manufacturer and the retailer. Through numerical analysis, we find QR may be beneficial to the retailer whereas either increases or decreases the manufacturer’s expected profit. We show that the dual-channel supply chain can achieve Pareto improvement with QR under certain conditions.