A Dual-Channel Supply Chain Model with Distribution-Free Approach using Customization

Abstract

n today’s competitive scenario, many business organizations provide their customers with personalization options, thereby increasing customer satisfaction through a wide range of choices. This strategy boosts profitability for various technologically advanced businesses. In this study, a dual-channel supply chain model with customization is developed to enhance firm profits. Dual-channel retailing delivers personalized products online, while standard products are available via traditional retail channels.
This paper modifies the existing dual-channel model by considering customer switching behavior between the two channels. It also introduces a preassigned threshold that signifies demand decline when the price difference between the online and offline channels exceeds a specific limit. Furthermore, the model incorporates demand uncertainty and fluctuation using a distribution-free approach. Demand price-sensitivity is also considered in constructing the centralized dual-channel supply chain model. The study concludes that adopting a dual-channel policy leads to better predictability and performance compared to conventional single-channel systems. Additionally, customer switching depends on which channel offers a lower price, especially when the price gap surpasses the threshold