Ordering policies and coordination in a two-echelon supply chain with Nash bargaining fairness concerns

This paper investigates the ordering policies of two competitive retailers, and the coordination status of a two-echelon supply chain by considering the fairness concerns of channel members. We consider that two retailers compete with each other over price, where overstock and shortage are allowed....

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Bibliographic Details
Published in:Journal of management analytics 2017-01, Vol.4 (1), p.55-79
Main Authors: Wei, Caimin, Li, Zhongping, Zou, Zongbao
Format: Article
Language:English
Subjects:
coordination
fairness concern
Nash bargaining
sale price
supply chain
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Summary:This paper investigates the ordering policies of two competitive retailers, and the coordination status of a two-echelon supply chain by considering the fairness concerns of channel members. We consider that two retailers compete with each other over price, where overstock and shortage are allowed. We assume that the demand is stochastic and considered with additive form. First, based on the Nash bargaining fairness reference point, we obtain the optimal decisions of the fairness-concerned channel members in both the centralized and the decentralized cases using a two-stage game theory. Secondly, we analyze the coordination status of the supply chain with Nash bargaining fairness concerns using ideas of optimization. Finally, numerical experiments are used to illustrate the influence of some parameters, the fairness-concerned behavioral preference of the channel members on the optimal decisions and the coordination status of supply chain. Some managerial insights are obtained.
ISSN:2327-0012
2327-0039
DOI:10.1080/23270012.2016.1239227