The Effects of Elasticity of Demand For Product Quality And Discount Rate In Dual-Channel Supply Chains

Industrial Engineering, Faculty of Engineering, Universitas of Pembangunan Nasional “Veteran” Jawa Timur, Indonesia

^* Corresponding author: farida.ti@upnjatim.ac.id

Abstract

This research employed a development model investigating offline and online demand functions in the dual-channel supply chain (DCSC) structure by Widodo He explains that the DCSC structure has a problem determining each channel’s prices and proposes a mathematical model approach between offline channels and online channels. The critical parameter is the relative ratio of customer acceptance on the online and the offline channels. Besides using the relative ratio of customer acceptance on the online and the offline channels, this research employed an additional variable, namely the elasticity of demand for quality and discount rate. Adding a new variable to the DCSC structure increases profit systems. This study aimed to investigate the best prices for offline and online channels to get optimal profits. Therefore, optimal prices were discovered for consumers and companies with the two sales structures running simultaneously. The model development profits showe that profits in both offline and online channels increased. In the current condition, the offline channels tended to dominate. However, the analysis of this study showed that online sales could control the sales structures. The overall profits of IDR 2,532,106.00 were obtained by setting a price of IDR 87,296.00 on offline channels and Rp. 89,300.00 on the online channel.