Study On Optimal Decision-making And Coordination With Retailer Disappointment Aversion Under Capital Constraint

The fact that supply chain participates in the issue of capital constraints which is prevalently existed in almost all of the enterprises,to a large extent,has restricted the growth of supply chain enterprises for a long term.As the development of supply chain operation and management,people start to pay attention to managerial issues of capital flow beyond areas such as supply chain logistics or information flow.In addition,they are trying to incorporate supply chain logistics,information flow as well as capital flow into one group in order to optimize capital allocation within the supply chain.Thus,we are able to boost the whole effectiveness in capital chain.Therefore,it's essential to research supply chain finance.Enterprises,which are in shortage of supply chain capital,often solve this by either applying for commercial credit from those core-leading peers,carrying delayed payment or applying for short-term commercial loan from commercial banks resorting to pivotal enterprises'credit advantage.As the development of Internet economy,diversification of financing platform and the growth of P2P lending in particular,an increasing multitude of approaches and methods will be taken to settle financing issue when enterprises lacking fund.It's inevitable that supply chain enterprises lacking fund should take all kinds of financing modes into comparison so as to choose the one that can bring its own benefit maximally in return.During the whole process of decision making,it's unavoidable that we will balance the differences between our mental expected results and the real economic results.Such kind of mental behavior has a subtle effect on the final decision-making outcome.Thereby,this paper,based on the Stackelberg Game Theory and Disappointment Aversion arising from bounded rationality behavior theory in behavioral economics,is going to study the optimal strategy and its coordination matters via disappointment aversion retailers when restrained by capital so that it is able for us to enrich researches on supply chain finance and provide abundant references for supply chain's harmonious operation and reasonable contract design.Firstly,we set up the optimal strategy for disappointment neutral retailers under the condition of capital constraint,laying the foundation for establishing benchmark with the best decisions and coordination approaches from disappointment aversion retailers under capital constraint of the following parts.Secondly,we include the element of disappointment aversion into the utility function of capital restrained retailers.From researching,we find out that,under the condition of capital constraint,no matter what kind of financing mode the disappointment aversion retailers prefer to,its optimal order quantity and effectiveness will be lessened as disappointment aversion level increases.When the disappointment aversion level being in a low extent,its optimal order quantity will be raised according to the increasing probability of selecting any preferential financing mode as its option and lessened when the preferential financing mode cost growing.When its level being in a high extent,its optimal order quantity will be dropped according to the increasing probability of selecting any preferential financing mode as its option and increased when the preferential financing mode cost growing.If,the optimal order quantity from disappointment aversion retailers,under the background of capital constraint,is less than that of the disappointment neutral retailers without capital constraint,we can say that the supply chain is not coordinated.When the disappointment aversion retailers prefer to adopt bank lending finance under capital constraint,core-leading manufacturers of the Game leader can take the coordinated mechanism of sharing financing cost to make ensure that supply chain can run well.When the disappointment aversion retailers like trade credit financing better,we should take profit-sharing mechanism to guarantee Pareto improvement in supply chain.In general,this paper aims to build 2 game models when disappointment aversion retailers prefer to their individual financing modes in the existence of capital constraint under the background of Stackelberg Game Theory and behavioral economics theory.We have researched that,under the capital constraint,disappointment aversion level from retailers will have a huge influence on their deciding the best solution.Also,we have established relevant coordinated mechanisms to ensure Pareto improvement in supply chain,which will have certain practical and directive significance for economic decision-makers formulating rational programmes and alleviating their disappointment aversion behaviors.