This paper studies reliable due date quotation for online customer orders in a two-echelon dual-channel supply chain when there is a threshold on quoted due dates. In this problem, there exist two delivery options for the e-tail customers with different cost and availability intervals, i.e., directly shipping by the manufacturer or through the retail store. The manufacturer has the capacity constraint for processing online orders. We adopt an online optimization perspective and propose algorithms to determine due date quotation coordinated with scheduling for e-tail customer with the objective of maximizing the total profit of completed orders considering linear duedate-sensitive revenue function and delivery costs. The approach of “competitive analysis” is performed to evaluate the proposed algorithms. We provide parametric bounds on the competitive ratio of any arbitrary online strategy, and investigate the competitive ratio of a specific online algorithm for single-type e-tail channel orders. Computational experiments illustrate the effectiveness of the proposed algorithms and analysis.

Introduction

In this paper, we study the problem of reliable and immediate due date quotation for online customer orders in a two-echelon dual-channel supply chain to maximize total profits. For the purposes of this investigation, we have one manufacturer and one retailer as the traditional channel, and online customers as the e-tail channel. Online customers place orders with the manufacturer; however, the products may be delivered to them directly by the manufacturer or through the retail store. In this problem, we try to maximize the due-date-sensitive profit function by quoting immediate and reliable due dates to online customers while considering capacity constraint and maximum acceptable lead time for online orders. The profit function decreases linearly as the quoted due dates increase and we consider single-type e-tail customers. With the growth of e-business, many manufacturers using a traditional retail store distribution model are expanding into online (e-tail) channels to provide more convenient access to products for their customers. Firms following this dual-channel strategy are referred to as “click-and-mortar” companies, which is distinct from their traditional “brick-and-mortar” counterparts (Chand and Chhajed 1992). Although dual-channel supply chains may help companies increase their customers’ awareness and shopping choices, this type of distribution model affects all business functions and operational decisions. Hill et al. (2002) introduced four main strategies for click-and-mortar companies. In the first strategy, firms separate retail and e-tail channels; each channel has its own warehouse, inventory control and pricing features. Some companies find it difficult to manage the same product in two different channels; therefore, in the second strategy, they outsource the e-tail channel—including all the order-fulfilment processes—to a third party.