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Supply chain with wholesale price contract under inequity aversion and random yield

  • 1.

    School of Economics, Fuyang Normal College, Fuyang 236037, China

  • 2.

    School of Management, University of Science and Technology of China, Hefei 230026, China

Cite this:
https://doi.org/10.3969/j.issn.0253-2778.2017.06.012
  • Received Date: 03 November 2016
  • Rev Recd Date: 04 April 2017
  • Publish Date: 30 June 2017
    Abstract

  • Abstract

    The effect of inequity aversion on supply chain with random yield and random demand was studied. Based on disadvantageous inequity aversion and advantageous inequity aversion, a model of wholesale price contract with random yield and random demand was established, the optimal ordering quantity of the retailer in different situations was obtained and the influence of fairness preferences on retailer’s optimal ordering quantity and supply chain coordination was analyzed. Finally, numerical examples were presented to illustrate the theoretical results. This research shows that the wholesale price contract can not achieve supply chain coordination for the fair neutral retailer. However, when the retailer has extreme advantageous inequity aversion, the wholesale price contract can improve the profit of the whole supply chain and better coordinate the supply chain, which extends the theory and application of the traditional wholesale price contract in real life.

    Abstract

    The effect of inequity aversion on supply chain with random yield and random demand was studied. Based on disadvantageous inequity aversion and advantageous inequity aversion, a model of wholesale price contract with random yield and random demand was established, the optimal ordering quantity of the retailer in different situations was obtained and the influence of fairness preferences on retailer’s optimal ordering quantity and supply chain coordination was analyzed. Finally, numerical examples were presented to illustrate the theoretical results. This research shows that the wholesale price contract can not achieve supply chain coordination for the fair neutral retailer. However, when the retailer has extreme advantageous inequity aversion, the wholesale price contract can improve the profit of the whole supply chain and better coordinate the supply chain, which extends the theory and application of the traditional wholesale price contract in real life.
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    • References(27)
  • [1]
    FEHR E, SCHMIDT K M. A theory of fairness, competition, and cooperation [J]. Quarterly Journal of Economics, 1999, 114(3): 817-868.
    [2]
    RABIN M. Incorporating fairness into game theory and economics [J]. The American Economic Review, 1993, 83(5): 1281-1302.
    [3]
    CUI T H, RAJU J S, ZHANG Z J. Fairness and channel coordination [J]. Management Science, 2007, 53(8): 1303-1314.
    [4]
    刘作仪，查勇. 行为运作管理: 一个正在显现的研究领域[J]. 管理科学学报, 2009, 12(4): 64-74.
    LIU Z Y, ZHA Y.Behavioral operations management: An emerging research field [J]. Journal of Management Sciences in China, 2009, 12(4): 64-74.
    [5]
    RABIN M. Incorporating fairness into game theory and economics [J]. The American Economic Review, 1993, 83(5): 1281-1302.
    [6]
    DUFWENBERG M, KIRCHSTEIGER G. A theory of sequential reciprocity [J]. Games and Economic Behavior, 2004, 47(2): 268-298.
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    BOLTON G E, OCKENFELS A. ERC: A theory of equity, reciprocity, and competition [J]. American Economic Review, 2000, 90(1): 166-193.
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    CALISKAN-DEMIRAG O, CHEN Y F, LI J. Channel coordination under fairness concerns and nonlinear demand [J]. European Journal of Operational Research, 2010, 207(3): 1321-1326.
    [9]
    BOLTON G E. A comparative model of bargaining: Theory and evidence [J]. The American Economic Review, 1991, 81(5): 1096-1136.
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    COX C A. Inequity aversion and advantage seeking with asymmetric competition [J]. Journal of Economic Behavior & Organization, 2013, 86(3): 121-136.
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    WANG K, YANG X, SUN Y, et al. A comparative study of marketing channel multiagent Stackelberg model based on perfect rationality and fairness preference [J]. Abstract and Applied Analysis, 2014： Article ID 527458.
    [12]
    毕功兵，何仕华，罗艳，等. 公平偏好下销售回扣契约供应链协调[J]. 系统工程理论与实践, 2013, 33(10): 2505-2512.
    BI Gongbing, HE Shihua, LUO Yan, et al. Supply chain coordination with sales-rebate contract under fairness preferences[J]. Systems Engineering—Theory & Practice, 2013, 33(10): 2505-2512.
    [13]
    王磊，成克河，王世伟. 考虑公平关切的双渠道供应链定价策略研究[J]. 中国管理科学, 2012, 20: 563-568.
    WANG Lei, CHENG Kehe, WANG Shiwei. Fairness concern and pricing strategies in dual-channel supply chain [J]. Chinese Journal of Management Science, 2012, 20: 563-568.
    [14]
    杜少甫，朱贾昂，高冬，等. Nash 讨价还价公平参考下的供应链优化决策[J]. 管理科学学报, 2013, 16(3): 68- 81.
    DU Shaofu, ZHU Jiaang, GAO Dong, et al. Optimal decision-making for Nash bargaining fairness concerned newsvendor in two-level supply chain [J]. Journal of Management Sciences in China, 2013, 16(3): 68- 81.
    [15]
    张克勇，吴燕，侯世旺. 具公平关切零售商的闭环供应链差别定价策略研究[J]. 中国管理科学, 2014, 22(3): 51-58.
    ZHANG Keyong, WU Yan, HOU Shiwang. Differential pricing strategy of considering retailer’s fairness concerns in the closed-loop supply chain [J]. Chinese Journal of Management Science, 2014, 22(3): 51-58.
    [16]
    毕功兵，瞿安民，梁樑. 不公平厌恶下供应链的批发价格契约与协调[J]. 系统工程理论实践, 2013, 33(1): 134-140.
    BI Gongbing, QU Anming, LIANG Liang. Supply chain coordination with wholesale price contract incorporating inequity aversion [J]. Systems Engineering: Theory & Practice, 2013, 33(1): 134-140.
    [17]
    KULKARNI S S. The impact of uncertain yield on capacity acquisition in process plant networks [J]. Mathematical and Computer Modelling, 2006, 43(7): 704-717.
    [18]
    陈志明, 陈志祥. 议价的 OEM 供应链在随机供需下的协调决策[J]. 管理科学学报, 2014, 17(5): 43-51.
    CHEN Zhiming, CHEN Zhixiang. Coordination in a price-negotiable OEM supply chain with random supply and random demand [J]. Journal of Management Sciences in China, 2014, 17(5): 43-51.
    [19]
    OKYAY H K, KARAESMEN F, ZEKICI S. Newsvendor models with dependent random supply and demand [J]. Optimization Letters, 2014, 8(3): 983-999.
    [20]
    KHOUJA M. The single-period (news-vendor) problem: Literature review and suggestions for future research [J]. Omega, 1999, 27(5): 537-553.
    [21]
    BAKAL I S, AKCALI E. Effects of random yield in remanufacturing with price-sensitive supply and demand [J]. Production and Operations Management, 2006, 15(3): 407-420.
    [22]
    WU M, ZHU S X, TEUNTER R H. The risk-averse newsvendor problem with random capacity [J]. European Journal of Operational Research, 2013, 231(2): 328-336.
    [23]
    SAYIN F, KARAESMEN F, ZEKICI S. Newsvendor model with random supply and financial hedging: Utility-based approach [J]. International Journal of Production Economics, 2014, 154(8): 178-189.
    [24]
    赵霞，吴方卫. 随机产出与需求下农产品供应链协调的收益共享合同研究[J]. 中国管理科学, 2009, 17(5): 88-95.
    ZHAO Xia, WU Fangwei. Coordination of agri-food chain with revenue-sharing contract under stochastic output and demand [J]. Chinese Journal of Management Science, 2009, 17(5): 88-95.
    [25]
    凌六一，郭晓龙，胡中菊，等. 基于随机产出与随机需求的农产品供应链风险共担合同[J]. 中国管理科学, 2013, 21(2): 50-57.
    LING Liuyi, GUO Xiaolong, HU Zhongju, et al. The risk-sharing contracts under random yield and stochastic demand in agricultural supply chain [J]. Chinese Journal of Management Science, 2013, 21(2): 50-57.
    [26]
    陈志明，陈志祥. 供需随机的 OEM 供应链在风险厌恶下的协调决策[J]. 系统工程理论实践, 2015, 35(5): 1123-1132.
    CHEN Zhiming, CHEN Zhixiang. Coordination in the risk-averse OEM supply chain with random supply and demand[J]. Systems Engineering—Theory & Practice, 2015, 35(5): 1123-1132.
    [27]
    LOEWENSTEIN G F, THOMPSON L, BAZERMAN M H. Social utility and decision making in interpersonal contexts [J]. Journal of Personality and Social Psychology, 1989, 57(3): 426-441.
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    [1]
    FEHR E, SCHMIDT K M. A theory of fairness, competition, and cooperation [J]. Quarterly Journal of Economics, 1999, 114(3): 817-868.
    [2]
    RABIN M. Incorporating fairness into game theory and economics [J]. The American Economic Review, 1993, 83(5): 1281-1302.
    [3]
    CUI T H, RAJU J S, ZHANG Z J. Fairness and channel coordination [J]. Management Science, 2007, 53(8): 1303-1314.
    [4]
    刘作仪，查勇. 行为运作管理: 一个正在显现的研究领域[J]. 管理科学学报, 2009, 12(4): 64-74.
    LIU Z Y, ZHA Y.Behavioral operations management: An emerging research field [J]. Journal of Management Sciences in China, 2009, 12(4): 64-74.
    [5]
    RABIN M. Incorporating fairness into game theory and economics [J]. The American Economic Review, 1993, 83(5): 1281-1302.
    [6]
    DUFWENBERG M, KIRCHSTEIGER G. A theory of sequential reciprocity [J]. Games and Economic Behavior, 2004, 47(2): 268-298.
    [7]
    BOLTON G E, OCKENFELS A. ERC: A theory of equity, reciprocity, and competition [J]. American Economic Review, 2000, 90(1): 166-193.
    [8]
    CALISKAN-DEMIRAG O, CHEN Y F, LI J. Channel coordination under fairness concerns and nonlinear demand [J]. European Journal of Operational Research, 2010, 207(3): 1321-1326.
    [9]
    BOLTON G E. A comparative model of bargaining: Theory and evidence [J]. The American Economic Review, 1991, 81(5): 1096-1136.
    [10]
    COX C A. Inequity aversion and advantage seeking with asymmetric competition [J]. Journal of Economic Behavior & Organization, 2013, 86(3): 121-136.
    [11]
    WANG K, YANG X, SUN Y, et al. A comparative study of marketing channel multiagent Stackelberg model based on perfect rationality and fairness preference [J]. Abstract and Applied Analysis, 2014： Article ID 527458.
    [12]
    毕功兵，何仕华，罗艳，等. 公平偏好下销售回扣契约供应链协调[J]. 系统工程理论与实践, 2013, 33(10): 2505-2512.
    BI Gongbing, HE Shihua, LUO Yan, et al. Supply chain coordination with sales-rebate contract under fairness preferences[J]. Systems Engineering—Theory & Practice, 2013, 33(10): 2505-2512.
    [13]
    王磊，成克河，王世伟. 考虑公平关切的双渠道供应链定价策略研究[J]. 中国管理科学, 2012, 20: 563-568.
    WANG Lei, CHENG Kehe, WANG Shiwei. Fairness concern and pricing strategies in dual-channel supply chain [J]. Chinese Journal of Management Science, 2012, 20: 563-568.
    [14]
    杜少甫，朱贾昂，高冬，等. Nash 讨价还价公平参考下的供应链优化决策[J]. 管理科学学报, 2013, 16(3): 68- 81.
    DU Shaofu, ZHU Jiaang, GAO Dong, et al. Optimal decision-making for Nash bargaining fairness concerned newsvendor in two-level supply chain [J]. Journal of Management Sciences in China, 2013, 16(3): 68- 81.
    [15]
    张克勇，吴燕，侯世旺. 具公平关切零售商的闭环供应链差别定价策略研究[J]. 中国管理科学, 2014, 22(3): 51-58.
    ZHANG Keyong, WU Yan, HOU Shiwang. Differential pricing strategy of considering retailer’s fairness concerns in the closed-loop supply chain [J]. Chinese Journal of Management Science, 2014, 22(3): 51-58.
    [16]
    毕功兵，瞿安民，梁樑. 不公平厌恶下供应链的批发价格契约与协调[J]. 系统工程理论实践, 2013, 33(1): 134-140.
    BI Gongbing, QU Anming, LIANG Liang. Supply chain coordination with wholesale price contract incorporating inequity aversion [J]. Systems Engineering: Theory & Practice, 2013, 33(1): 134-140.
    [17]
    KULKARNI S S. The impact of uncertain yield on capacity acquisition in process plant networks [J]. Mathematical and Computer Modelling, 2006, 43(7): 704-717.
    [18]
    陈志明, 陈志祥. 议价的 OEM 供应链在随机供需下的协调决策[J]. 管理科学学报, 2014, 17(5): 43-51.
    CHEN Zhiming, CHEN Zhixiang. Coordination in a price-negotiable OEM supply chain with random supply and random demand [J]. Journal of Management Sciences in China, 2014, 17(5): 43-51.
    [19]
    OKYAY H K, KARAESMEN F, ZEKICI S. Newsvendor models with dependent random supply and demand [J]. Optimization Letters, 2014, 8(3): 983-999.
    [20]
    KHOUJA M. The single-period (news-vendor) problem: Literature review and suggestions for future research [J]. Omega, 1999, 27(5): 537-553.
    [21]
    BAKAL I S, AKCALI E. Effects of random yield in remanufacturing with price-sensitive supply and demand [J]. Production and Operations Management, 2006, 15(3): 407-420.
    [22]
    WU M, ZHU S X, TEUNTER R H. The risk-averse newsvendor problem with random capacity [J]. European Journal of Operational Research, 2013, 231(2): 328-336.
    [23]
    SAYIN F, KARAESMEN F, ZEKICI S. Newsvendor model with random supply and financial hedging: Utility-based approach [J]. International Journal of Production Economics, 2014, 154(8): 178-189.
    [24]
    赵霞，吴方卫. 随机产出与需求下农产品供应链协调的收益共享合同研究[J]. 中国管理科学, 2009, 17(5): 88-95.
    ZHAO Xia, WU Fangwei. Coordination of agri-food chain with revenue-sharing contract under stochastic output and demand [J]. Chinese Journal of Management Science, 2009, 17(5): 88-95.
    [25]
    凌六一，郭晓龙，胡中菊，等. 基于随机产出与随机需求的农产品供应链风险共担合同[J]. 中国管理科学, 2013, 21(2): 50-57.
    LING Liuyi, GUO Xiaolong, HU Zhongju, et al. The risk-sharing contracts under random yield and stochastic demand in agricultural supply chain [J]. Chinese Journal of Management Science, 2013, 21(2): 50-57.
    [26]
    陈志明，陈志祥. 供需随机的 OEM 供应链在风险厌恶下的协调决策[J]. 系统工程理论实践, 2015, 35(5): 1123-1132.
    CHEN Zhiming, CHEN Zhixiang. Coordination in the risk-averse OEM supply chain with random supply and demand[J]. Systems Engineering—Theory & Practice, 2015, 35(5): 1123-1132.
    [27]
    LOEWENSTEIN G F, THOMPSON L, BAZERMAN M H. Social utility and decision making in interpersonal contexts [J]. Journal of Personality and Social Psychology, 1989, 57(3): 426-441.
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