PRICING AND ORDERING STRATEGIES OF SUPPLY CHAIN WITH SELLING GIFT CARDS

Gift cards is frequently used to replace traditional gift cash and gift products, especially when gift givers do not know gift receivers' performances. Basing on this phenomenon, we analyze the supplier's and the retailer's strategies with selling gift cards. First, we develop a Stackelberg model without selling gift cards. Next, we develop two models with selling gift cards when unredeemed gift cards balances become the retailer's property and the state's property, respectively. We present the optimal solutions and exam the impacts of parameters on the optimal decisions and the supply chain performance. When the retailer sells gift cards, the optimal order quantity is smaller than that without selling gift cards. The optimal wholesale price with selling gift cards is related to the treatment of unredeemed gift card balances. When unredeemed gift cards balances become the retailer's property, the wholesale price is lower than that without selling gift cards. However, when unredeemed gift cards balances become the state's property, the wholesale price is lower than that without selling gift cards in some conditions. And with selling gift cards, the optimal expected profits of retailer and supply chain are better off, but the optimal expected profit of supplier is worse off.