Coordinating a Supply Chain with a Loss-Averse Retailer and Effort Dependent Demand
This study investigates the channel coordination issue of a supply chain with a risk-neutral manufacturer and a loss-averse retailer facing stochastic demand that is sensitive to sales effort. Under the loss-averse newsvendor setting, a distribution-free gain/loss-sharing-and-buyback (GLB) contract...
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| Format: | Article |
| Language: | English |
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Wiley
2014-01-01
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| Series: | The Scientific World Journal |
| Online Access: | http://dx.doi.org/10.1155/2014/231041 |
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| _version_ | 1832563316989362176 |
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| author | Liying Li Yong Wang |
| author_facet | Liying Li Yong Wang |
| author_sort | Liying Li |
| collection | DOAJ |
| description | This study investigates the channel coordination issue of a supply chain with a risk-neutral manufacturer and a loss-averse retailer facing stochastic demand that is sensitive to sales effort. Under the loss-averse newsvendor setting, a distribution-free gain/loss-sharing-and-buyback (GLB) contract has been shown to be able to coordinate the supply chain. However, we find that a GLB contract remains ineffective in managing the supply chain when retailer sales efforts influence the demand. To effectively coordinate the channel, we propose to combine a GLB contract with sales rebate and penalty (SRP) contract. In addition, we discover a special class of gain/loss contracts that can coordinate the supply chain and arbitrarily allocate the expected supply chain profit between the manufacturer and the retailer. We then analyze the effect of loss aversion on the retailer’s decision-making behavior and supply chain performance. Finally, we perform a numerical study to illustrate the findings and gain additional insights. |
| format | Article |
| id | doaj-art-c2f37856ecb04329ad44e118601c9364 |
| institution | Kabale University |
| issn | 2356-6140 1537-744X |
| language | English |
| publishDate | 2014-01-01 |
| publisher | Wiley |
| record_format | Article |
| series | The Scientific World Journal |
| spelling | doaj-art-c2f37856ecb04329ad44e118601c93642025-02-03T01:20:27ZengWileyThe Scientific World Journal2356-61401537-744X2014-01-01201410.1155/2014/231041231041Coordinating a Supply Chain with a Loss-Averse Retailer and Effort Dependent DemandLiying Li0Yong Wang1Science College, Chongqing Jiaotong University, Chongqing 400074, ChinaSchool of Economics and Business Administration, Chongqing Key Laboratory of Logistics, Chongqing University, Chongqing 400044, ChinaThis study investigates the channel coordination issue of a supply chain with a risk-neutral manufacturer and a loss-averse retailer facing stochastic demand that is sensitive to sales effort. Under the loss-averse newsvendor setting, a distribution-free gain/loss-sharing-and-buyback (GLB) contract has been shown to be able to coordinate the supply chain. However, we find that a GLB contract remains ineffective in managing the supply chain when retailer sales efforts influence the demand. To effectively coordinate the channel, we propose to combine a GLB contract with sales rebate and penalty (SRP) contract. In addition, we discover a special class of gain/loss contracts that can coordinate the supply chain and arbitrarily allocate the expected supply chain profit between the manufacturer and the retailer. We then analyze the effect of loss aversion on the retailer’s decision-making behavior and supply chain performance. Finally, we perform a numerical study to illustrate the findings and gain additional insights.http://dx.doi.org/10.1155/2014/231041 |
| spellingShingle | Liying Li Yong Wang Coordinating a Supply Chain with a Loss-Averse Retailer and Effort Dependent Demand The Scientific World Journal |
| title | Coordinating a Supply Chain with a Loss-Averse Retailer and Effort Dependent Demand |
| title_full | Coordinating a Supply Chain with a Loss-Averse Retailer and Effort Dependent Demand |
| title_fullStr | Coordinating a Supply Chain with a Loss-Averse Retailer and Effort Dependent Demand |
| title_full_unstemmed | Coordinating a Supply Chain with a Loss-Averse Retailer and Effort Dependent Demand |
| title_short | Coordinating a Supply Chain with a Loss-Averse Retailer and Effort Dependent Demand |
| title_sort | coordinating a supply chain with a loss averse retailer and effort dependent demand |
| url | http://dx.doi.org/10.1155/2014/231041 |
| work_keys_str_mv | AT liyingli coordinatingasupplychainwithalossaverseretailerandeffortdependentdemand AT yongwang coordinatingasupplychainwithalossaverseretailerandeffortdependentdemand |