Solving Dual-Channel Supply Chain Pricing Strategy Problem with Multi-Level Programming Based on Improved Simplified Swarm Optimization

Abstract

With the evolution of the Internet and the introduction of third-party platforms, a diversified supply chain has gradually emerged. In contrast to the traditional single sales channel, companies can also increase their revenue by selling through multiple channels, such as dual-channel sales: adding a sales channel for direct sales through online third-party platforms. However, due to the complexity of the supply chain structure, previous studies have rarely discussed and analyzed the capital-constrained dual-channel supply chain model, which is more relevant to the actual situation. To solve more complex and realistic supply chain decision problems, this paper uses the concept of game theory to describe the pricing negotiation procedures among the capital-constrained manufacturers and other parties in the dual-channel supply chain by applying the Stackelberg game theory to describe the supply chain structure as a hierarchical multi-level mathematical model to solve the optimal pricing strategy for different financing options to achieve the common benefit of the supply chain. In this study, we propose a Multi-level Improved Simplified Swarm Optimization (MLiSSO) method, which uses the improved, simplified swarm optimization (iSSO) for the Multi-level Programming Problem (MLPP). It is applied to this pricing strategy model of the supply chain and experiments with three related MLPPs in the past studies to verify the effectiveness of the method. The results show that the MLiSSO algorithm is effective, qualitative, and stable and can be used to solve the pricing strategy problem for supply chain models; furthermore, the algorithm can also be applied to other MLPPs.

Keywords

• dual-channel supply chain
• pricing strategy
• Stackelberg game
• multi-level programming
• improved simplified swarm optimization