Abstract: Westudy a dual-channel supply chain under
decentralized setting in which manufacturer sells to retailer and to
customers directly usingan online channel. A customer chooses the
purchase-channel based on price and service quality. Also, to buy
product from the retail store, the customer incurs a transportation cost
influenced by the fluctuating gasoline cost. Both companies are under
the revenue sharing contract. In this contract the retailer share a
portion of the revenue to the manufacturer while the manufacturer
will charge the lower wholesales price. The numerical result shows
that the effects of gasoline costs, the revenue sharing ratio and the
wholesale price play an important role in determining optimal prices.
The result shows that when the gasoline price fluctuatesthe optimal
on-line priceis relatively stable while the optimal retail price moves
in the opposite direction of the gasoline prices.