Price Differentiation and Inventory Decisions in a Socially Responsible Dual-Channel Supply Chain with Partial Information Stochastic Demand and Cannibalization

Round 1

Reviewer 1 Report

The article is interesting and generally, with some revisions that are suggested below:

• It is not friendly to readers since your article is a long story, you may try to make it to short.
• You can make a drawing since you proposed comprehensive DCSC models that provide joint decisions framework on CSR investment, pricing, and inventories.
• Your study finding for example of the terms of higher revenues regardless of the nature of demand after the numerical analysis illustrated that centralized analysis is superior compared to the corresponding decentralized analysis, that you can state in the abstract in your article.
• You need to state the changes in demand leakage and the effect of the CSR investment on the revenues and CSR investment are illustrated which have revealed that the market share distribution between to two distribution channels in DCSC using a price differentiation augments the DCSC revenues compared to fixed market share allocation.

Author Response

Authors would like to thank the editors and reviewers for their comments on an earlier version of the manuscript. These comments have considerably improved the manuscript. The revised manuscript is re-submitted for a reconsideration to a possible publication in the journal. The majors changes/highlights into the manuscript are clearly marked with Blue font color text  in the revised to assist reviewers and editors to track these changes.

Reviewer 1

The article is interesting and generally, it deserves to be published with some revisions that are suggested below:

• It is not friendly to readers since your article is a long story, you may try to make it to short.

Response:

We agree with the reviewer is article a bit longer. While we concur with reviewer, authors would like to bring to the kind attention of the reviewer that this paper addresses three distinct demand scenarios, namely, (i) deterministic demand; (ii) stochastic demand; and (ii) stochastic demand with partial information.  Given the analytical framework presented, and we have explored centralized (integrated channel) and decentralized (pricing-only contract), these analyses have elongated this paper. Paper also tackles a number of issues by interfacing, Corporate Social Responsibility (CSR), Pricing decision, Stochastic demand with partial information, Market share distribution using a differentiation price with cannibalization effects, and the dual-cannel supply chains.  A joint framework has resulted the mathematical lengthening and therefore paper has been slightly outnumbered in page limits.

While we agree that paper is a bit long in the length. But the proofs the proposition stated in the paper while presented, can be moved to an online supplement. This will greatly help reducing the length of the paper while still reader can access to mathematical proofs, if they needed. Most journal nowadays adopt this policy. This can greatly diminish the length of the paper.

• You can make a drawing since you proposed comprehensive DCSC models that provide joint decisions framework on CSR investment, pricing, and inventories.

Response:

The keyword, “drawing” used by the reviewer is unclear to authors.  However, with this keyword authors are assuming that the reviewer is pointing to the conclusions. 

We have revisited the sections in numerical analysis to highlight the finding.  In addition, there are number of finings which analytical (closed-form solutions) in nature and therefore propositions are postulated to the stated these key findings (see Proposition 1,  to 4; Remarks 1 to 4 page 12, 13 ,and 14). These results are only good for deterministic demand.  For stochastic demand with closed-from analysis solutions and results are unobtainable and therefore numerical study. Please see section 6.3. It is highlighted with blue color font text for your reference.   

• Your study finding for example of the terms of higher revenues regardless of the nature of demand after the numerical analysis illustrated that centralized analysis is superior compared to the ctorresponding decentralized analysis, that you can state in the abstract in your article.

Response:

There are some axioms (core principles) consistent with the well published research with the scope of supply chain pricing models, we have also confirmed these in this study. These findings are:

1. Revenue gains (profit) of the integrated channel (centralized) is superior to that of the decentralized channels
2. Pricing decisions for decentralized channel are observed to be superior compared to pricing decisions that of the corresponding integrated channel. This holds true for all demand scenarios
3. Revenue gains are deterministic demand is superior to that of the stochastic demand.

In addition to above findings which are analytically confirmed for deterministic demand, the numerical studies section 6.3 on page 28-29 highlighted the impact of pricing differentiation while using as market segmentation tool to split the market share among the two channels, direct/online, and retailer channel. We have shown this impact taking an arbitrary differentiation price (v) oppose to the optimal price differentiation. The results are summarized in Figures 2, 3 and 4.   

• You need to state the changes in demand leakage and the effect of the CSR investment on the revenues and CSR investment are illustrated which have revealed that the market share distribution between to two distribution channels in DCSC using a price differentiation augments the DCSC revenues compared to fixed market share allocation.

Response:

Partly this comment is already answered in the responses to the previous comments from the reviewer. Actually, this is already reported by fixing a differentiation price   as long as the differentiation is exogenous (fixed) the market share is fixed. The leakage proportion (v) is changes impact are explored in these numerical experiments. The numerical study shown in Figure 2 through 4 emphasize these effects.  

We thank reviewer for pointing this issue.

Reviewer 2 Report

I found the paper very interesting, sophisticated and well written. 

I would like to congratulate auhors. However I suggest to develope the literature review with some papers related to the Supply Chain practice published in Sustainability as well as some other mdpi journals.

Kindly suggest to add Study results discussion with comparision to another study results already published.

Author Response

Authors would like to thank the reviewer for a very encouraging review.  We have revised the literature review by adding the relevant papers from DCSC pricing published in “sustainability” into the revised literature review. Please see the revised list of references, these references are marked with the blue color font text. Some related references form this journal cited and included into the reference list are:

Xideng, Zhou, Xu Bing, Xie Fei, and Li Yu. "Research on Quality Decisions and Coordination with Reference Effect in Dual-Channel Supply Chain." Sustainability 12, no. 6 (2020): 2296.

Chen, H., Dong, Z., & Li, G. (2020). Government Reward-Penalty Mechanism in Dual-Channel Closed-Loop Supply Chain. Sustainability, 12(20), 8602.

Yuan, K., Wu, G., Dong, H., He, B., & Wang, D. (2020). Differential Pricing and Emission Reduction in Remanufacturing Supply Chains with Dual-Sale Channels under CCT-Mechanism. Sustainability, 12(19), 8150.

Reviewer 3 Report

Reconsider after revision.

The manuscript deals with a timely topic that is of strong interest to both academics and practitioners. This paper examined price differentiation and inventory decisions in a socially responsible dual-channel supply chain. However, the major weaknesses of the paper are weak introduction, weak literature review, and weak conclusion. I will attempt to be more specific in the following sections.

This research should find a stronger argument regarding (1) why the study is important and (2) why the findings are meaningful for scholars/practitioners. The introduction section should be re-written.

The author’s literature review on “Dual-Channel Supply Chain” and “Partial Demand Information” is weak. It is necessary to conduct thorough literature review focused on those two concepts. First, review academic articles focused on Partial Demand Information.

Summarize the existing studies, and create a table. Then, review academic articles, focused on Partial Demand Information. Summarize the existing studies, and create another table.

Conclusion: The discussion is a little disappointing and could be written in a much stronger way. Also, there are very little managerial implications, and more specific, poignant recommendations should be provided to the practitioners/managers. This information would give the paper a much better finish. What can the practitioners can do with the findings suggested in the conclusion section?

There is no answer to the "so what" question
There is nothing here to inspire future research or implications for practice

Comments for author File: Comments.pdf

Author Response

The manuscript deals with a timely topic that is of strong interest to both academics and practitioners. This paper examines price differentiation and inventory decisions in a socially responsible dual-channel supply chain. However, the major weaknesses of the paper are weak introduction, weak literature review, and weak conclusion. I will attempt to be more specific in the following sections.

This research should find a stronger argument regarding (1) why the study is important and (2) why the findings are meaningful for scholars/practitioners. The introduction section should be re-written.

Response:

I would like to thank the reviewer for the comments. These comments are indeed very important to improve the paper.  I have revised the introduction  and literature review sections based on these comments. Moreover, a comparative table is listed in the paper which clearly distinguishes this paper from the existing published studies (papers). It is worth mentioning here that the if the reviewer would have notified the specific shortcomings it would greatly help the author to address the specific shortcoming in the introduction, literature review and conclusion sections.

The author’s literature review on “Dual-Channel Supply Chain” and “Partial Demand Information” is weak. It is necessary to conduct thorough literature review focused on those two concepts. First, review academic articles focused on Partial Demand Information. Summarize the existing studies, and create a table. Then, review academic articles, focused on Partial Demand Information. Summarize the existing studies, and create another table.

Response:

Authors have re-visited the introduction and literature review sections.  However, we like to remark here that there are limited studies that have consider the price-dependent stochastic demand where information is only partially known.  Partial demand studies  commonly referred to as  distribution-free approach finds  wide application in relation to the newsvendor problem. With the specific application to Dual-channel supply Chain (DCSC) there very limited studies. Some of these studies are:

Modak, N. M., & Kelle, P. (2019). Using social work donation as a tool of corporate social responsibility in a closed-loop supply chain considering carbon emissions tax and demand uncertainty. Journal of the Operational Research Society, 1-17.

Raza, S. A. (2018). Supply chain coordination under a revenue-sharing contract with corporate social responsibility and partial demand information. International Journal of Production Economics, 205, 1-14.

Raza, S. A., & Govindaluri, S. M. (2019). Greening and price differentiation coordination in a supply chain with partial demand information and cannibalization. Journal of Cleaner Production, 229, 706-726.

In fact, to the best of author’s knowledge, this paper is among the first to consider Corporate Social Responsibility (CSR) in an DCSC framework with the consideration of partial demand information, in addition to the consideration of stochastic demand (full information) and deterministic demand. I have cited most relevant studies which have explored the case of partial demand information in a supply chain (SC) within the context of  DCSC. The purpose of is paper is not to present is full coverage of all published research. Yet, more than 120 papers have been cited in this manuscript.

While we emphasize that this paper not only considers the stochastic demand with partial information, but it also considers the case of price-dependent deterministic demand, and also the price-dependent stochastic demand whose distribution information is known. We have carefully reviewed the recently published paper, and have included these studies into revised paper. Authors hope this will improve the paper to the reviewer’s’ satisfaction.     

Rahmani, D., Abadi, M. Q. H., & Hosseininezhad, S. J. (2020). Joint decision on product greenness strategies and pricing in a dual-channel supply chain: A robust possibilistic approach. Journal of Cleaner Production, 256, 120437.

Wang, J., Jiang, H., & Yu, M. (2020). Pricing decisions in a dual-channel green supply chain with product customization. Journal of Cleaner Production, 247, 119101.

Li, S., Li, M., & Zhou, N. (2020). Pricing and coordination in a dual-channel supply chain with a socially responsible manufacturer. PloS one, 15(7), e0236099.

Conclusion: The discussion is a little disappointing and could be written in a much stronger way. Also, there are very little managerial implications, and more specific, poignant recommendations should be provided to the practitioners/managers. This information would give the paper a much better finish. What can the practitioners can do with the findings suggested in the conclusion section?

There is no answer to the "so what" question

There is nothing here to inspire future research or implications for practice

Response:

To address this shortcoming authors have done following

1. The discussion section is revised in pursuit of highlighting the contributions of this paper.
2. Managerial implications are notified and indicated in bold font where ever possible
3. Avenues for possible future research and extension are pointed out

Reviewer 4 Report

The paper is interesting for its theme and for the research presented. 

Nevertheless, in my opinion, the paper could be improved inserting at the beginning of the literature review a brief introduction to the actual criticalities of the supply chains that suffer of the mentioned in the paper issues and also others, like uncertainty, risk exposures, and so on. For this I can suggest to refer to Fera et al. in IJIEC, 2018 or to papers by Grubbström in IJPE and so on.

Author Response

Authors would like to thank the reviewer for encouraging comments.  Besides literature review,  in this paper, we have also presented a comparative table which greatly help readers to distinguish the contribution of this paper. There are already over 119 cited references.  Nevertheless, it is a very good suggestion from the reviewer to enrich paper with additional references. Authors would be very interested to include these references to the revised manuscript to enrich it.  However, reviewer did not provide appropriate details for these references, namely. Fera et al; and  Grubbstrom. The current information to these bibliographic references is insufficient to find these references and therefore author at this stage unable to include these into the revised paper. Authors are willing are include these references to the paper, once the appropriate information regarding these references are known to authors.