Work

Integrated Pricing and Inventory Decisions for Product Quality-Driven Extended Warranty Services

Year: 2024

Type: article

Abstract: Extended warranty services have become increasingly important for both manufacturers and retailers, offering avenues for new profit sources and growth opportunities. Focusing on the multiple effects of product quality, this study develops a two-period supply chain decision model to analyze the effects of product quality, pricing, and inventory management in the context of extended warranty services. Using a Stackelberg dynamic game model, this study examines the interaction between a manufacturer and a dominant retailer who provides extended warranties. The results indicate significant differences in optimal decisions between centralized and decentralized supply chains, especially concerning pricing and inventory control. Introducing a “quality cost-sharing” contract enhances product quality and improves coordination, leading to increased profits for both the manufacturer and the retailer. Numerical simulations confirm that the cost-sharing contract effectively balances product quality improvements with supply chain profitability.

Source: Sustainability

DOI: 10.3390/su16208769

Authors: Wendi Zha, Zhenyong Wu, Jianxin Tan, Yiming Chen, Yaping Fu, Zhitao Xu

Institutions: Nanjing University of Information Science and Technology, Qingdao University, Nanjing University of Aeronautics and Astronautics

Language: English

Topic: Supply Chain and Inventory Management

Subfield: Management Information Systems

Field: Business, Management and Accounting

Domain: Social Sciences

Open Access status: gold

Estimated APC paid: $2,728

Funder: Nanjing University of Information Science and Technology