Research On The Optimal Control Strategies Of Stochastic Inventory Systems Based On Prospect Theory

Inventory control plays an important role in the enterprise’s production and oper-ation activities.The classical stochastic inventory problem is based on risk neutrality and achieves the optimal strategy by optimizing a certain performance of the system.Considering risk in the inventory management,however,the behavior of the decision makers id often neglected,or the risk caused by uncertainty is considered.The prospect theory indicates that decision makers make decisions from a relativistic point of view when facing the complicated market environment,incompleteness of information,and uncertain factors.When making decisions,they not only pay attention to the final re-sults,but also to the changes of the results,i.e.,the influence of reference dependence.Joint the reference dependence of prospect theory and the behavior of decision-makers motivate the points of the dissertation.Base on the prospect theory,this dissertation studies the decision-maker’s refer-ence dependence and loss-aversion behavior in stochastic inventory system from the perspectives of company and customer respectively.The optimal pricing and invento-ry control strategies of the firm are discussed and analyzed by means of by means of optimization,game analysis,numerical simulation and simulation,based on the theory of operations research,behavioral economics,statistics and other interdisciplinary dis-ciplines.Furthermore,the effect of strategic customers behavior,reference dependence and loss aversion on the firm’s optimal decision are discussed.And the two-stage s-election behavior of customers adversely affects the firm are investigated.In view of the negative effects of strategic customers,several coping strategies of the firm are ex-plored.The research shows that price commitment policy and the quantity commitment strategies can mitigate the negative impact of strategic customer behavior on the firm.However,the compensation contract can not improve the firm’s profits.At last,the s-tochastic inventory model under stochastic and uncertain supply constraints based on zero prospect is established,and the game between the firm and strategic customers is analyzed.The research progress of the dissertation is summarized as follows:1.An inventory model based on quantity-oriented reference dependence is pro-posed under full information.Firstly,based on quantity-oriented reference,the optimal order strategy of loss-averse firm is derived.Secondly,the impact of the loss degree and the quantity-oriented reference point is investigated jointly on the optimal ordering quantity and the profit maximization of the firm.The loss-averse retailer’s order quan-tity is always less than loss-neutral decision maker’s when the reference dependency is under consideration.However,the optimal order quantity of the loss-averse system with quantity-oriented reference point is more than,equal to or less than that of the classical system.Furthermore,the structural properties and sensitivity analysis of the optimal solution are addressed.The optimal order quantity decreases in the loss-averse level and the order cost,while the influence of the selling price and residual value of products on the optimal order quantity of the firm also depends on their reference level.Thirdly,joint inventory control and pricing strategy is investigated based on quantity-oriented reference dependence.The main contribution is to investigate the effect of the information level on firm’s optimal decisions.2.The problem of optimal inventory control and pr:icing strategy for stochastic inventory system in the presence of strategic customers is studied with no-information.Firstly,a two-stage sales model of loss aversion system with risk preference strategy customers is established.We assume that customers are risk preference and the compa-ny is loss aversion type based on reference dependence,where zero profit as its refer-ence point.Secondly,the firm’s inventory control and pricing strategy are studied when facing loss aversion type customers.At this time,customers adopt random reference point.Theoretical analysis shows that strategic customers have significant influence on the optimal inventory and selling price of the system in both inventory systems.In view of the negative influence of strategic customers,the firm adopts the reimburse-ment contract,inventory commitment mechanism and price commitment strategy.It is shown that the reimbursement contract cannot alleviate the impact of strategic behavior of customers while the firm’s profit can be improved by the price commitment strategy in most cases.3.The stochastic inventory problem of uncertainty yield and uncertain supply capacity are discussed.Interestingly,we find that random supply capacity do not affect the firm’s optimal order quantity even though considering strategic customers behavior.We show that the loss-averse firm orders less than the loss-neutral and the risk-neutral ones when considering strategic customers’ behavior.However,the optimal selling price is different.Under random supply capacity,the optimal price of loss-averse firm is lower than that of the loss-neutral one but larger than the risk-neutral firm’s order quantity without strategic customer.Further,the firm will decrease the order quantity and increase the selling price as loss aversion level increase.In addition,we investigate the impact of the other systems parameters on the optimal order quantity and the selling price.The innovations of the dissertation can be summarized as follows:under the frame-work of prospect theory,the optimal control strategy and the game between firm and customer are studied.The quantity-oriented reference dependence is proposed under full information,and the influence of strategic customers on firm’s optimal decision-making is analyzed.Under no-information,zero-reference point and the stochastic ref-erence dependence are considered from the perspective of firm and strategic customer,respectively.The dissertation studies the existence of the rational expectation equilib-rium and the propositions when considering reference dependence and loss-aversion.Furthermore,the dissertation presents inventory game model,in which under random yield and stochastic capacity.