Research On Risk Diversification Contract And Supply Chain Coordination Under Economic Man's Preferences

In recent years,with the constant innovation of science and technology,the continuous improvement of people's living standards,the increasingly personalized of the products needs,the market has seen appeared the phenomenon of the acceleration of product updates and the gradual shortening of product life cycle.But due to short life cycle product has the features of short sales cycle,big demand randomness,strong supply instability,the enterprises who sale or product the short life cycle product and the corresponding supply chain often have to face the challenge of huge risks,thus,applying which theory and method to guide the operation of firms and the management of the corresponding supply chain has become the decision makers' essential topic.To solve this problem,the newsboy model,which makes the optimal strategy to maximize the expected profit,and its extended model has been widely applied,and a lot of research results has been obtained.In these studies,there exist a class of discussion about decentralized supply chain,in which the companies only care their own decisions,and ignore the objective of centralized supply chain,eventually lead to low efficiency of the supply chain.Note that via stipulating the payment terms,supply chain contract can encourage the supply chain members' strategies keep consistent with the goals of integrated supply chain,therefore,in the supply chain management,more and more scholars would use the supply chain contract to stimulate the overall efficiency of supply chain,however,they ignore more or less the losses of imbalance between supply and demand.In addition,a large number of experiments and empirical investigates show that the decision makers' preferential behavior often has great influence on the optimal strategies of the enterprises.Based on the analysis above,this article takes the firms,who product or sale the short life cycle products,and the related supply chain system as the research object,by introducing the preferential behavior of decision-maker(including risk aversion,loss aversion and fairness concerns),we build a risk diversification contract model with two aspects: one is the upstream and downstream enterprises share the core enterprise's losses of the short supply and oversupply,and another is compensation mechanism that both agents can benefit.Thus,we manage operation strategies of short life cycle products under setting that the decision makers have preferential behavior,and we strive to expand and improve the studies of short life cycle product supply chain operation to a certain extent.Specific content is as follows:First,we consider the ordering decisions of a two-echelon supply chain with a single supplier and a single retailer,where the retailer has preferential behavior.And due to the retailer's effort can directly affect the market demand,and indirectly affect the ordering strategy.Thus,in the effort-induced demand,we investigate the feasibility of the risk diversification contract with the retailer's preferential behavior,and we show that the risk diversification contract can coordinate the supply chain,accomplish the Pareto improvement and distribute the performance of the supply chain reasonably in accordance with the both parties' bargaining power.Second,we discuss the ordering strategies in the random demand,by considering the wholesale price contract as a benchmark model,the realization of supply chain coordination and Pareto improvement as the precondition of the feasibility of contract,and the arbitrary Nash bargaining solution as the standards of the rational allocation of the system performance,we compare the difference between the risk diversification contract and other contracts(including revenue-sharing,buy-back,quantity-discounts,quantity-flexibility and sale-rebate contract)under the setting that the retailer possess preferential behavior,and point out the advantages of the risk diversification contract.Finally,we consider a supply chain consisted of one manufacturer and one supplier,and investigate the capacity investment problem with the demand uncertainly and the supplier own preferential behavior.We indicate that the risk diversification contract not only can realize supply chain coordination and Pareto improvement,but also can allocate the system's performance appropriately.And we further compare and contrast the risk diversification contract with the alternative contracts(including option,payback,capacity reservation,and revenue sharing contract),and analysis the reason why both agents would like to accept the risk diversification contract.The above research results not merely enrich the supply chain contract types,but also provide a kind of reference basis that how to choose a contract.Hence,our results are more advantageous to realize the further transaction between core enterprise and subordinate enterprises,and impel to the long-term and orderly conduct of trade,and therefore induce both parties gain the “win-win” situation.