scholarly journals Coordinating a Supply Chain with a Loss-Averse Retailer and Effort Dependent Demand

2014 ◽  
Vol 2014 ◽  
pp. 1-12 ◽  
Author(s):  
Liying Li ◽  
Yong Wang
Keyword(s):  
Decision Making ◽  
Supply Chain ◽  
Loss Aversion ◽  
Special Class ◽  
Numerical Study ◽  
Supply Chain Performance ◽  
Channel Coordination ◽  
Gain Loss ◽  
Decision Making Behavior ◽  
Dependent Demand

This study investigates the channel coordination issue of a supply chain with a risk-neutral manufacturer and a loss-averse retailer facing stochastic demand that is sensitive to sales effort. Under the loss-averse newsvendor setting, a distribution-free gain/loss-sharing-and-buyback (GLB) contract has been shown to be able to coordinate the supply chain. However, we find that a GLB contract remains ineffective in managing the supply chain when retailer sales efforts influence the demand. To effectively coordinate the channel, we propose to combine a GLB contract with sales rebate and penalty (SRP) contract. In addition, we discover a special class of gain/loss contracts that can coordinate the supply chain and arbitrarily allocate the expected supply chain profit between the manufacturer and the retailer. We then analyze the effect of loss aversion on the retailer’s decision-making behavior and supply chain performance. Finally, we perform a numerical study to illustrate the findings and gain additional insights.

scholarly journals Fresh-Keeping Effort and Channel Performance in a Fresh Product Supply Chain with Loss-Averse Consumers’ Returns

2018 ◽  
Vol 2018 ◽  
pp. 1-20 ◽  
Author(s):  
Bojun Gu ◽  
Yufang Fu ◽  
Yanling Li
Keyword(s):  
Supply Chain ◽  
Loss Aversion ◽  
Cost Sharing ◽  
Numerical Study ◽  
Wholesale Price ◽  
Channel Coordination ◽  
Return Policy ◽  
Numerical Studies ◽  
Buyback Contract ◽  
Fresh Products

We consider a fresh product supply chain consisting of one fresh product supplier and one e-tailer. Supplier sells fresh products through e-tailer in an online market, and the e-tailer offers a full-refund return policy to loss-averse consumers and exerts a fresh-keeping effort to keep the product at the optimum freshness level. By developing an analytical model, we derive the optimal price, quantity, and fresh-keeping effort jointly and verify that it is unique in the centralized setting. Based on the comparison, we demonstrate that the e-tailer’s profit is greater with fresh-keeping effort than without it; therefore, the e-tailer has an incentive to engage in fresh-keeping effort. We also show that the return rate is independent of the fresh-keeping effort and consumers’ loss aversion. In the decentralized setting, we first characterize the optimal wholesale price by the numerical study and then find that although the buyback contract still works, the revenue-sharing contract fails to achieve channel coordination under our model formulation. Furthermore, we develop a revenue- and cost-sharing contract that can coordinate the supply chain by designing a new contractual mechanism. Our numerical studies offer the Pareto improvement regions under the buyback and revenue- and cost-sharing contracts in which the supplier and e-tailer can earn more expected profits compared with being under wholesale price contract.

scholarly journals Analysis of the Value of Information and Coordination in a Dyadic Closed Loop Supply Chain

2020 ◽  
Vol 12 (20) ◽  
pp. 8398
Author(s):  
Juan Pedro Sepúlveda-Rojas ◽  
Rodrigo Ternero
Keyword(s):  
Decision Making ◽  
Supply Chain ◽  
Value Of Information ◽  
Closed Loop ◽  
Local Optimization ◽  
Supply Chain Performance ◽  
Optimization Approach ◽  
Closed Loop Supply Chain ◽  
Definition Of ◽  
The Impact

Purpose: This article analyzes the value of information and coordination in a closed loop supply chain (CLSC) and discusses the benefits of a global or local optimization approach and the impact of uncertainty. Methodology: A theoretical dyadic closed loop supply chain is analyzed where the manufacturer re-manufactures products returned by customers, producing “as good as new products” for the retailer. Twelve coordination scenarios were analyzed. For the definition of these scenarios, a framework based on two criteria was proposed: value of information and perimeter of decision making. Findings: Information on returns leads to lower costs than information on demand. In the presence of complete or partial coordination between the actors in the supply chain, it is preferable to have low product return rates. However, if we are in the complete absence of coordination, high rates of return are more convenient as they function as a buffer against uncertainties. The perimeter of decision making (global or local optimization) does not significantly improve the supply chain performance in relation to its costs. Only the exchange of information improves its performance. Therefore, companies should make efforts to exchange information, first, on their lot sizes, then on their returns and finally, on the customer demand. Originality: The novelty of our work relies on an analysis of the closed loop supply chain performance with the simultaneous presence of information, coordination, and uncertainty.

Price and Carbon Emissions Level Decisions in a Two-Echelon Supply Chain: Insights from Carbon Labelling

2013 ◽  
Vol 572 ◽  
pp. 668-671
Author(s):  
Yong Hong Cheng ◽  
Zhong Kai Xiong ◽  
Yu Xiong
Keyword(s):  
Decision Making ◽  
Supply Chain ◽  
Carbon Emissions ◽  
Environmental Awareness ◽  
Supply Chain Performance ◽  
Market Demand ◽  
Purchasing Behavior ◽  
Numerical Examples ◽  
Optimal Decisions ◽  
Initial Carbon

To analyze the effects of carbon labelling on firms production and marketing decisions, as well as consumers purchasing behavior, we consider a supply chain consisting of one manufacturer and one retailer and assume the market demand is both price-and carbon emissions level-sensitive, then the optimal decisions policies for pricing and carbon emissions level are discussed under decentralized and centralized decision-making. Interestingly, our results show that only when the initial carbon emissions level of the product is less than a certain threshold, as consumers environmental awareness increasing, the amount of carbon emissions per unit of output produced will decrease. On the contrary, the carbon emissions level will increase. Moreover, we found that when consumers environmental awareness maintains the same level, the centralized decision-making is more conducive to reduce carbon emissions and improve whole supply chain performance. Finally, some numerical examples are given to verify the research results.

scholarly journals Coordinating Contracts for Two-Stage Fashion Supply Chain with Risk-Averse Retailer and Price-Dependent Demand

2013 ◽  
Vol 2013 ◽  
pp. 1-12 ◽  
Author(s):  
Minli Xu ◽  
Qiao Wang ◽  
Linhan Ouyang
Keyword(s):  
Supply Chain ◽  
Supply Chain Coordination ◽  
Revenue Sharing ◽  
Channel Coordination ◽  
Risk Averse ◽  
Revenue Sharing Contract ◽  
Risk Neutral ◽  
Mean Variance ◽  
Variance Approach ◽  
Dependent Demand

When the demand is sensitive to retail price, revenue sharing contract and two-part tariff contract have been shown to be able to coordinate supply chains with risk neutral agents. We extend the previous studies to consider a risk-averse retailer in a two-echelon fashion supply chain. Based on the classic mean-variance approach in finance, the issue of channel coordination in a fashion supply chain with risk-averse retailer and price-dependent demand is investigated. We propose both single contracts and joint contracts to achieve supply chain coordination. We find that the coordinating revenue sharing contract and two-part tariff contract in the supply chain with risk neutral agents are still useful to coordinate the supply chain taking into account the degree of risk aversion of fashion retailer, whereas a more complex sales rebate and penalty (SRP) contract fails to do so. When using combined contracts to coordinate the supply chain, we demonstrate that only revenue sharing with two-part tariff contract can coordinate the fashion supply chain. The optimal conditions for contract parameters to achieve channel coordination are determined. Numerical analysis is presented to supplement the results and more insights are gained.

scholarly journals Quality Decision-Making Behavior of Bodies Participating in the Agri-Foods E-Supply Chain

2020 ◽  
Vol 12 (5) ◽  
pp. 1874
Author(s):  
Xu Jing ◽  
Yao Guanxin ◽  
Dai Panqian
Keyword(s):  
Decision Making ◽  
Supply Chain ◽  
Supply Chains ◽  
Food Supply ◽  
Quality Information ◽  
Business Practices ◽  
Quality Inspection ◽  
High Quality ◽  
Decision Making Behavior

The quality of agri-foods in e-supply chains confronts more threats than that in the traditional agri-food supply chain. However, most of the existing studies focusing on the quality problems of fresh agri-products are mainly cases studies and statistical analyses, and they do not take into account the farmers’ willingness to comply with safe agri-food supply procedures. To solve the supply quality problems of fresh agri-foods and help participators make a better choice, the decision-making behavior on the supply quality of agri-foods in the e-supply chain was deeply studied in this paper using game theory. Some factors related to the decision behavior of the supply chain were analyzed, including the supervision intension of the government, the rights protection consciousness of consumers, and the intensity of punishment for poor-quality agri-foods. These factors have an important influence on the farmers’ willingness to provide high-quality products and e-business’ probability of inspection. Compared with three different decision models of agri-food e-supply chains, the results show that the decentralized decision model is better than the centralized model from the view of quality protection. The behavior of members of the supply chain is as follows: the farmers’ willingness to supply high-quality agri-foods increases with the increase in the consumers’ consciousness of their rights and the government’s supervision intensity. The “experience deviation” phenomenon also occurs when a new e-business makes a decision about its quality inspection behavior in this e-supply chain where the quality information is traceable. As such, e-business enterprises should reduce their quality inspection behavior based on the increase in the government’s supervision intensity. This happens to be opposite to the traditional experience where quality information is not traceable. This study not only extends the research framework of the novel electronic supply chain, but also provides a certain reference for the subsequent research and e-business practices of fresh produce in developing countries.

Ego Depletion in the Relationship Between Behavior Inhibition and Loss Aversion

2019 ◽  
Vol 47 (4) ◽  
pp. 1-12
Author(s):  
Wenbin Gao ◽  
Yue Zhou ◽  
Ting Tao ◽  
Yan Yu ◽  
Ligang Wang
Keyword(s):  
Decision Making ◽  
Loss Aversion ◽  
Positive Association ◽  
Framing Effect ◽  
Ego Depletion ◽  
Control Group ◽  
Behavioral Inhibition System ◽  
Decision Making Behavior ◽  
Behavior Inhibition ◽  
The Relationship

We examined the associations between ego depletion, personality, and decision-making behavior, and investigated whether ego depletion enhances the relationship between the behavioral inhibition system (BIS) and loss aversion. Participants (N = 70) were randomly assigned to depletion or control conditions, completed a financial decision-making task to test the framing effect, and responded to a measure of BIS. The results showed a framing effect in the decision-making task that was not weakened by ego depletion. However, participants in the depleted (vs. control) group, regardless of framing, showed more loss aversion in the decision-making task. Further, ego depletion enhanced the positive association between the BIS and framing effects, which means that ego depletion moderated the effect of the BIS on loss aversion. Thus, ego depletion did not directly contribute to more conservative or impulsive decision making, but it did lead individuals to act more in line with their habits or characteristics. Implications of these findings are discussed.

Impact of metric-alignment on supply chain performance: a behavioral study

2022 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Arunachalam Narayanan ◽  
Rafay Ishfaq
Keyword(s):  
Decision Making ◽  
Supply Chain ◽  
Bullwhip Effect ◽  
Supply Chain Performance ◽  
Behavioral Study ◽  
Managerial Decision ◽  
Managerial Decision Making ◽  
New Approach ◽  
Content Type ◽  
Supply Chain Costs

PurposePrevious research has shown that firms are struggling to incorporate collaboration among supply chain partners. This paper presents a new approach to incorporate collaboration using metric-alignment. The analysis provides key insights regarding the usefulness of this approach to synchronize decision-making that leads to reduced bullwhip effect, less backordering and lower supply chain costs.Design/methodology/approachThis research is based on a large-scale behavioral study comprising 556 participants in multi-echelon supply chain games. Supply chain decisions from these experiments are evaluated to study the impact of metric-alignment on managerial decision-making and the corresponding effects on the overall supply chain performance.FindingsResults show that the metric-alignment approach offers an informal and self-enforced governance mechanism that changes managerial decision-making behaviors and improves supply chain performance. Results also show this approach to yield operational and financial benefits for all supply chain partners in the form of reduced bullwhip effect, less backordering and lower supply chain costs.Originality/valueThis is the first behavioral study of its kind that evaluates a new approach to incorporate collaboration in supply chains using metric-alignment. This approach avoids the shortcomings of current industry practices of using monetary penalties, such as on-time in-full (OTIF) mandates in supply contracts. The study shows that metric-alignment approach can improve overall supply chain performance while offering mutually beneficial rewards for all supply chain partners.

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