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| Retailer’s Optimal Ordering Policy with Product Quality Differentiation |
| JIN Liang， XU Lu，XIONG Jing，WU Yingjia |
| 1. Nanchang University, Nanchang, China; 2. Railway Police College, Zhengzhou， China |
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Abstract Considering consumers’ heterogeneous preference for quality differentiated products, this paper establishes the utility function of consumers’purchase of quality differentiated products. And two types of models, which are the single sourcing and the dual-sourcing supply chain game models, are constructed in this paper. Moreover, the impacts of price dominance and product differentiation competition on the supply chain equilibrium. The results show that the dual-sourcing strategy is the best choice of the retailer, and the retailer’s price dominance will reduce its motivation to choose the dual-sourcing strategy, while product differentiation competition will encourage the retailer to choose the dual-source purchasing strategy. The dual-sourcing strategy will lead to the intensification of price competition between high and low quality products, and decrease the profit of upstream manufacturers with increasing the profit of the supply chain.
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Received: 02 June 2020
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