Research On Decision Making And Coordination In Supply Chains With Fairness Concern

Traditional research on operations management is based on the assumptions of perfect rationality.Howerver,the research on behavioral economic experiments and corresponding theories have demonstrated the existence of bounded rationality.The behavioural factors,such as fairness pereference,risk aversion,loss aversion and so on,may be considered during the process of decision making.In recent years,the progress in understanding human behavior and cognition has begun to affect economics,finance,accounting,strategies and so on.The research of operations management from behavioral perspective is also continually growing and expanding.In such a research background,this thesis aims at investigating the role of fairness in supply chain management,thus riching the research of behavioral operations management and providing preferences for making operational decisions.Through reading the literatures at home and abroad,we find that the supply chain settings are not considered completely in the research which combines the fairness concern and supply chain management.In particular,the research on common but relatively complex supply chains,such as cooperative supply chains,dual-channel supply chains and competitive supply chains,are scare.This thesis attempts to contribute in these aspects,which incorporates fairness concern into relatively complex supply chains,and mainly studies the role of fairness in supply chain management.First,this thesis incorporates fairness into a cooperative supply chain including one manufacturer and one retailer,and investigates how it affects the firms' optimal decisions and profits.The results enable an efficient search for the firms' optimal decisions.They also show that fairness concern of the manufacturer can promote demand,while fairness concern of the retailer can lower demand.An extensive numerical study is conducted and it is found that introducing fairness concern of one firm into the cooperative supply chain can increase that firm's profit but decrease the other firm's profit.The numerical study also provides some insights on how the firms' decisions and profits change with important factors such as fairness parameters and demand elasticity parameters.Second,this thesis incorporates fairness into a dual channel supply chain which consists of one supplier and one retailer,and investigates how it affects the firms' optimal decisions and profits.The results show that taking the retailer's fairness into account is important,because dual channel setting may decrease supplier's profit when the fairness concern is nore significant.Under the dual channel choice by the supplier,the fairness which decreases the supplier's profit and increases the retailer's profit is a method to redistribute the system profit.Particularly,the system profit is improved under certain market conditions.Third,this thesis incorporates fairness into a competitive supply chain which consists of one supplier and two competing retailers.Although Introducing the competity into the model increases the complexity,but the equilibrium solutions can be obtained under different ranges of fairness and competition parameters,and complete equilibria are provided in theory.The fairness in the downstream always decreases the wholesale price.With not big fairness and difference between two markets,the fairness increases retailer' profit share,but downstream competition weakens such effects,and competition narrows the difference between two wholesale prices and the difference between two retail prices.In particular,,the results show that under certain conditions of fairness and competition,a simple wholesale price can coordinate the whole supply chain.Finally,standard economic experiments are conducted with subjects recruited from campus to test the model predictions.The experimental data strongly support our model predictions.It is statistically significant that the wholesale prices are lower than that predicted by the benchmark model where the subjects are purely self-interested.The difference between the members' profits in the same market decreases in fairness,but competition in the downstream market dampens such effects,as shown in our data analysis.Specifically,the model estimation confirms that fairness indeed exists in competitive supply chains and fairness concern plays a role in the subjects' decision process.The fairness is incorporated into a cooperative supply chain,a dual-channel supply chain and competitive supply chains in this thesis.Supply chain members' equilibrium decisions are solved by mathematical induction.In cooperative supply chain model,both of the retaler's fairness and the supplier's fairness are considered,and the effects in the cooperative supply chain are analyzed theoretically and numerically.The results provide theoretical basis and practical guidance.In dual-channel supply chain model,game theoretical analysis is conducted under strict egalitarian relationship.The results give theoretical decision-making schemes firstly,and then the numerical experiments examine and explain the corresponding phenomenon.In competitive supply chain model,the research overcomes the mathematical complexity and provides the perfect equilibria solutions,and takes up the mantle of competitive case where the retailers compete.In addition,economic experiments with respect to the competive case are conducted to examine the existence of fairness.The data analysis is conducive to supply chain members for making decisions and contract designing.