Impacts of supplier hubris on inventory decisions and green manufacturing endeavors

Lu, Xin; Shang, Jennifer; Wu, Shinyi; Hegde, Gajanan G.; Vargas, Luis G.; Zhao, Daozhi

doi:10.1016/j.ejor.2015.02.051

Cited by 35 publications

(22 citation statements)

References 48 publications

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“…The neutralization of revenues and costs results in that the retailer's profit is independent of his overconfidence factor. What we find here is entirely different from those results in [32,[35][36][37], which further enriches the related research involving overconfidence and low-carbon supply chain.…”

Section: Proposition 2 (I)contrasting

confidence: 92%

“…Hambrick [31] suggested that the behavioural characteristics of decision makers matter for organizational performance, thereby extending to operational activities such as inventory and ordering decisions. Other studies [32][33][34][35][36] have also confirmed that overconfidence is one of the most consistent, powerful, and widespread behavioural characteristics of decision makers in situations characterized by random outcome, both in field studies and controlled experiments. In field studies, Croson et al [34] showed that overconfidence leads the newsvendor to place suboptimal orders and earn lower profits than well-calibrated newsvendors; Bendoly et al [33] argued that overconfidence may lead purchasing managers to under-estimate the variance of demand or of lead-time, thus inducing them to hold too little safety stock.…”

Section: Introductionmentioning

confidence: 79%

“…According to the model descriptions and assumptions in Section 2, we know that supplier's overconfidence factor k s and retailer's overconfidence factor k r satisfy κ s > 1 and 0 < κ r < 1, respectively. Referring to literature [35,39], we specify that a = 100pieces, b = 2, p = 25 $/pcs, w = 15 $/pcs, c s = 5 $/pcs, s = 3 $/pcs, h = 2 $/pcs, I = 5, A = 70, B = 90, and ε ∼ N(100, 15 2 ).…”

Section: Numerical Analysismentioning

confidence: 99%

See 2 more Smart Citations

Joint Decisions on Emission Reduction and Inventory Replenishment with Overconfidence and Low-Carbon Preference

Zhao

Peng

2018

Sustainability

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This paper presents a game-theoretical analysis of joint decisions on carbon emission reduction and inventory replenishment with overconfidence and consumer's low-carbon preference for key supply chain players when facing effort-dependent demand. We consider respectively the overconfidence of a supplier who overestimates the impacts of his emission reduction efforts on product demand and the overconfidence of a retailer who underestimates the variability of the stochastic demand. We find, surprisingly, that the supplier's overconfidence can mitigate "double marginalization" but hurt self-profit, while the retailer's overconfidence can be an irrelevant factor for self-profit. The retailer aiming at short-term trading should actively seek an overconfident supplier, while the supplier should actively seek a rational retailer for whom the critical fractile is more than 0.5, whereas for an overconfident retailer, the critical fractile is less than or equal to 0.5. The study also underlines the effect of regulation parameters as an important contextual factor influencing low-carbon operations.

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Section: Proposition 2 (I)contrasting

confidence: 92%

Section: Introductionmentioning

confidence: 79%

Section: Numerical Analysismentioning

confidence: 99%

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Joint Decisions on Emission Reduction and Inventory Replenishment with Overconfidence and Low-Carbon Preference

Zhao

Peng

2018

Sustainability

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“…Order bias also has a U-shaped relationship with market profitability, and the costs of overconfidence are convex. Lu et al [32] studied inventory decision-making and performance evaluation under various overconfidence forms, respectively. Ma et al [33] studied advertising and pricing strategies of overconfident manufacturers in dual channel competition environment.…”

Section: Literature Reviewmentioning

confidence: 99%

Inventory Financing with Overconfident Supplier Based on Supply Chain Contract

Jiang

Liu

2018

Mathematical Problems in Engineering

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Overconfidence is a universal psychological behavior. Overconfidence on demand awareness will have a significant impact on operation decisions. The supplier estimated the demand with excessive precision which influences the inventory financing decision-making deeply. We built the demand function based on the supplier’s overconfidence. Then we established the retailer, supplier, and the Bank’s profit function, respectively. Through the analysis of the bilevel Stackelberg game, we obtained the order quantity of the retailer with the capital constraint, the wholesale price of overconfident supplier, and the loan-to-value ratio of Bank, and we analyzed the influence of overconfidence on the decision variables. We have several findings as follows. First, the overconfidence makes the decisions of the retailer, supplier, and Bank deviate from the rational decisions. Second, the space of the market profit will affect the decision variables in the joint decision-making. Third, the financing supply chain (including the Bank and supply chain) should have a positive attitude towards the overconfidence of the supplier. Forth, in the joint decision-making, the supplier need determines the buyback price according to the capital demand; and in the decentralized decision-making, the supplier should try to use high buyback price strategy.

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“…In recent years, many scholars have attempted to study operation management problems from the perspective of overconfidence. Lu X et al [14] study the impacts of supplier hubris on inventory decisions under RMI and VMI models. They point out that supplier overconfidence prompts the supplier to exert more efforts and enhances the profits of the retailer and of the entire supply chain.…”

Section: Introductionmentioning

confidence: 99%

Impacts of Manufacturer Overconfidence on Supply Chain Performance with Demand Forecasting

Liu¹,

Wang²,

Dai³

2019

dtcse

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In this paper, we construct a dyadic supply chain consisting of a single manufacturer with overconfidence and a rational retailer under the MTO strategy. The manufacturer and the retailer play a Bayesian Stackelberg game in our model. We consider that the manufacturer may underestimate the variability in his forecast precision (PR bias). We derive the optimal decisions for two supply chain scenarios: one dominated by manufacturers (MS) and one dominated by retailers (RS). Our results suggest that both the manufacturer and the retailer can achieve profit growth under PR bias, but the forecasts made by each side must meet certain conditions. Further, the impacts of each type of overconfidence on SC performance are similar under the MS and RS models, and the manufacturer is always more likely to benefit from his confidence under the RS model than under the MS model. In addition, the influences of the overconfidence on retailers' profits require additional judgment with effort costs.

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Impacts of supplier hubris on inventory decisions and green manufacturing endeavors

Cited by 35 publications

References 48 publications

Joint Decisions on Emission Reduction and Inventory Replenishment with Overconfidence and Low-Carbon Preference

Joint Decisions on Emission Reduction and Inventory Replenishment with Overconfidence and Low-Carbon Preference

Inventory Financing with Overconfident Supplier Based on Supply Chain Contract

Impacts of Manufacturer Overconfidence on Supply Chain Performance with Demand Forecasting

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