Research On Contract And Coordination Of Supply Chain With Social Preferences Of Fairness Concern And Reciprocity

This thesis studies how to incorporate social preferences, such as fairness concerns and reci-procity, into the context of operations management, especially the supply chain. Besides, the impacts of theses social preferences on the the supply chain’s decisions and channel’s efficiency are also investigated. Specifically, it focuses on four important questions:firstly, what are the equilibria after incorporating social preferences of fairness concerns and reciprocity? secondly, what are the differences between the conventional channel and the behavioral channel (e.g., fairness-concerned channel and reciprocal channel)? thirdly, how do these behavioral factors influence the decisions of the supplier and the retailer in the supply chain? finally, what ef-fects do these social preferences on the coordination of the channel? In order to answer these questions, two models of behavioral operations are formulated.Newsvendor model for a dyadic supply chain with Nash bargaining fairness concerns is built first. In this model, a supplier plays Stackelberg game with a retailer under a frame of the newsbendor problem. Both of them are assumed to have the preferences of status seeking, which means they have the desires for a higher relative payoff compared with the other party’s. Simultaneously, Nash bargaining solution is used as fairness reference to formally depict per-ceptively fair compromise, which is a new perspective to study fairness concerns in a supply chain. Our analysis shows that in a dyadic supply chain, the channel efficiency will decrease because of the preference for status seeking. The retailer’s share will be larger when the supplier concerns fairness less, and the supplier’s sensitivity to fairness plays a relatively more important role in alleviating double marginalization and improving the channel’s efficiency. Additionally, another interesting managerial insight is concluded that fairness concerns will not change the status of channel coordination in certain conditions. More specifically, those contracts able (unable) to coordinate fairness-neutral supply chain, based on affine transformations with scale factors within certain ranges, still succeed (fail) to coordinate the fairness-concerned. Though the introduction of fairness concern into the supply chain will not change the conditions of coordination, it has great impact on the difficulty of coordinating the channel.Then a dyadic channel in which the retailer or (and) the supplier has (have) a preference for reciprocity is investigated. The two players play Stackelberg game. When both of them have preferences for reciprocity, as the leader, the supplier makes optimal wholesale price to maximize her ("her" represents the supplier and "he" represents the retailer) utility which con-sists of profit term and reciprocal utility term. As the follower, the retailer determines his retail price as the best response to the supplier’s optimal decision in order to maximize his utility. In this model, the factors, such as psychological game and intention, are introduced to the context of supply chain for the first time since the theory of reciprocity emphasizes the importance of intentions behind actions. Additionally, two scenarios were discussed:(1) the retailer has a preference for reciprocity while the supplier doesn’t have;(2) both the retailer and the supplier have preferences for reciprocity. Each scenario may have several sub-scenarios since we are not sure which is greater, γμ or1. Thus, two kinds of supply chains, acrimonious supply chain if γμ>1and harmonious supply chain if γμ≤1, are discussed and analyzed in reciprocity model. Furthermore, equilibria are derived under the two scenarios and the existence and the uniqueness of the equilibria of different scenarios can be guaranteed. Finally, numerical ex-amples are conducted to study the impacts of major parameters on reciprocal equilibria. The results show that the reciprocal channel can be coordinated by using a constant wholesale price in the acrimonious supply chain, which implies that the problem of double marginalization is not necessary to be present all the time. However, it is impossible to coordinate the channel with a wholesale-price contract in the harmonious supply chain. The paper also shows that compared with traditional retail price, the retailer charges a lower retail price to reward the sup-plier’s lower wholesale price and a higher retail price to punish the supplier’s higher wholesale price in the harmonious supply chain.