Newsvendor model for a dyadic supply chain with Nash bargaining fairness concerns

Fan

Mathematical Problems in Engineering

2016

Logistics service supply chain (LSSC) is a new type of service supply chain. This paper investigates the channel coordination issue in a two-echelon LSSC composed of one logistics service integrator (LSI) and one functional logistics service provider (FLSP) under fairness concerns. The models for a reservation price-only contract under disadvantageous inequality and advantageous inequality are established, respectively, in which the procurement cost, the potential shortage cost, and the operation cost are considered under stochastic market demand. Based on this model, the LSI's optimal reservation quantity can be determined. Furthermore, we analyze the impact of fairness concerns and the related costs on channel performance and channel coordination. The results are presented in four aspects: (1) channel coordination of the LSSC can be achieved under certain conditions when the LSI experiences advantageous inequality; (2) the spiteful behavior of the LSI leads to the reduction of the channel profit, and channel coordination cannot be achieved when the LSI suffers from disadvantageous inequality; (3) the LSI's reservation quantity and the channel profit are affected by the LSI's fairness concerns; (4) motivated by the concerns of fairness, the LSI's reservation quantity is related not only to his procurement cost and shortage cost but also to the FLSP's operation cost.

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 1 more Smart Citation

Channel Coordination in Logistics Service Supply Chain considering Fairness

Fan

Mathematical Problems in Engineering

2016

“…Yang et al considered a distribution channel consisting of a single manufacturer and a single retailer and investigated the effect of the retailer's fairness concerns [22]. Du et al investigated the newsvendor problem for a dyadic supply chain in which both the supplier and the retailer have the preference of status seeking with fairness concerns [23]. Wu and Niederhoff studied the impact of fairness concerns on supply chain performance in the two-party newsvendor setting [24].…”

Section: Literature Reviewmentioning

confidence: 99%

The Complexity and Simulation of Revenue Sharing Negotiation Based on Construction Stakeholders

2018

This paper focuses on the complexity characteristics of a stakeholder's revenue sharing for time compression in construction projects, such as adopting a life cycle perspective, the preferences of stakeholders, and the adaptability behaviors in the negotiation process. We build an agent-based model on revenue sharing negotiation. Considering that the agents who are in a weak position not only care about their own benefits but also compare their benefits to others, we design an experimental scenario where a contractor has fairness preference based on China's reality. According to different sympathy and envy coefficients, we can divide the inequity aversion preference into three typical types, and we research how a contractor's different types of inequity aversion preferences impact revenue sharing coefficient of agreements, results of successful negotiations, and efficiency in negotiations. Results are as follows: it is advantageous for a contractor to maintain a modest inequity aversion for their own earnings and the degree of sympathy preference in inequity aversion has an important impact on the time to reach consensus while the degree of jealousy preference has no obvious effect. If contractors' sympathy preference is maintained within a moderate range, it will achieve a higher success rate of negotiations in the negotiation process; the success rate of negotiation is affected largely by the agents' sympathy preference, though it is also influenced by the jealousy preference, but it is not very sensitive.

“…Ren and Huang [29] summarized several methods of modeling customer bounded rationality and also surveyed implementation of approaches with respect to appropriate operations management settings. In a dyadic supply chain, Du et al [30] examined fairness preferences especially individuals' psychological understanding. Moreover, to formulate the fairness concerns, they used Nash bargaining solution as fairness reference.…”

Section: Literature Reviewmentioning

confidence: 99%

Dual Market Facility Network Design under Bounded Rationality

et al. 2018

A number of markets, geographically separated, with different demand characteristics for different products that share a common component, are analyzed. This common component can either be manufactured locally in each of the markets or transported between the markets to fulfill the demand. However, final assemblies are localized to the respective markets. The decision making challenge is whether to manufacture the common component centrally or locally. To formulate the underlying setting, a newsvendor modeling based approach is considered. The developed model is solved using Frank-Wolfe linearization technique along with Benders' decomposition method. Further, the propensity of decision makers in each market to make suboptimal decisions leading to bounded rationality is considered. The results obtained for both the cases are compared.