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Mathematical Problems in Engineering
Volume 2014 (2014), Article ID 160782, 12 pages
http://dx.doi.org/10.1155/2014/160782
Research Article

Competition with Online and Offline Demands considering Logistics Costs Based on the Hotelling Model

1Logistics Research Center, Shanghai Maritime University, Shanghai 201306, China
2College of Information Engineering, Shanghai Maritime University, Shanghai 201306, China

Received 8 August 2014; Accepted 7 September 2014; Published 30 September 2014

Academic Editor: Tsan-Ming Choi

Copyright © 2014 Zhi-Hua Hu et al. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

Abstract

Through popular information technologies (e.g., call centers, web portal, ecommerce and social media, etc.), traditional shops change their functions for servicing online demands while still providing offline sales and services, which expand the market and the service capacity. In the Hotelling model that formulates the demand effect by considering just offline demand, the shops in a line city will locate at the center as a the result of competition by games. The online demands are met by the delivery logistics services provided by the shops with additional cost; the consumers’ waiting time after their orders also affects their choices for shops. The main purpose is to study the effects of the following aspects on the shops’ location competition: two logistics costs (consumers’ travelling cost for offline demands and the shops’ delivery logistics cost for online demands), the consumers’ waiting cost for online orders, and the ratios of online demands to the whole demands. Therefore, this study primarily contributes to the literature on the formulation of these aspects by extending the Hotelling model. These features and effects are demonstrated by experiments using the extended Hotelling models.