A Study of the Influence of Heterogeneous Behavior Preference in Decision-making and Supply Chain Coordination

Abstract

Abstract:

With the retailer‘s heterogeneous behavior preference, the production decision and coordination are studied. The utility function considering loss aversion and fairness is developed by using new decision-making reference point, and effect of the retailer’s loss aversion and fairness concerns about the optimal decision and supply chain coordination is studied. 〖JP2〗Theoretical analysis and numerical examples show that while wholesale prices meet different conditions, the retailer‘s loss aversion and fairness concerns show different effect on the optimal order. In the decentralized case, the supply chain cannot achieve system optimality, but both sides of the supply chain can achieve Pareto optimality by introducing the insurance contract.

Key words: loss aversion, fairness concerns, supply chain, insurance contract

Yang Xing-lin1, Qiu Min-cai1, Yao Xun2. A Study of the Influence of Heterogeneous Behavior Preference in Decision-making and Supply Chain Coordination[J]. Industrial Engineering Journal .

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