Supply Chain Optimization And Coordination With Homogeneous Fairness Concerned Newsvendors

With the rapid development of modern society, behavioral operation has become a hot issue of Economics and Operations and gradually form a new branch of academic study. Traditional theories in economics assume that individuals are self-interested in their own material payoffs. Recent advances in behavioral economics have relaxed the assumption and shown that people are not purely self-interested and always exhibit social preferences in many real-life situations. Most existing literatures in experimental economics show that agents, like individuals, are bounded rational, specifically manifested in loss-averse, reference dependence, fairness concern, risk-averse and so on.Researches in behavioral operations find that individuals always care about other’s payoff in many real life situations. It is still in the initial stage for the research on fairness concerns and the research on supply chain considering fairness concerns is less, which is the lack of comprehensive theoretical framework. Based on these considerations, we incorporate fairness concern into the supply chain and investigate the influence of fairness concerns on supply chain optimization and coordination. According to the different contents, this paper can be divided into two parts:The first part is supply chain optimization and coordination with homogeneous fairness concerned newsvendors, i.e., Chapter3. This part considers a supply chain with one supplier and two homogeneous retailers and assumes that the retailers who operate in a same market are fairness concerned and the supplier is fairness-neutral. The main contribution of this part is that we establish a fairness concern framework of the supply chain based on Shapley value. Under the background of newsvendor model, we investigate the role of fairness concerns on supply chain optimization and coordination.The second part is game-theoretical analysis for a supply chain with distributional and peer-induced fairness concerned retailers, i.e., Chapter4. On the basis of Chapter3, we extend the model by assuming that the two homogeneous retailers operate in two separated identical market and the supplier is distributional fairness concerned. The supplier plays two stackelberg games with the retailers sequentially. The first retailer is distributional fairness concerned and the second retailer is distributional and peer-induced fairness concerned. The Nash bargaining solution is used as the distributional fairness reference and the first retailer’s payoff is used as the peer-induced fairness reference. Under the background of newsvendor model, we investigate the influence of distributional and peer-induced fairness concerns on the decision-making processes of supply chain members when the wholesale price is exogenous and endogenous respectively.Comparing with the traditional dyadic supply chain model, this paper is different from others by considering multiple retailers in the supply chain system. In the first part, the channel members play a n-person cooperative game together while in the second part, the supplier plays stackelberg games with the retailers sequentially. This paper enriches and develops the literatures on supply chain considering fairness concerns and it is valuable for managers in the real life situations.