Advances in Production Engineering & Management
Volume 13 | Number 3 | September 2018 | pp 345–357
https://doi.org/10.14743/apem2018.3.295
Decision-making strategies in supply chain management with a waste-averse and stockout-averse manufacturer
Jian, M.; Wang, Y.L.
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A B S T R A C T
Behavioral preferences is an important factor that affects the decision-making strategies of enterprises. Usually, the behavioral preferences will lead to decision-making that deviates from profit maximization. In this study, we investigate the influence of a dominant manufacturer's behavioral preferences on decision-making and subsequent impact on profits. This study looks at the profits of the manufacturer, retailer and the system as a whole. We construct a two-stage supply chain involving a retailer and a manufacturer who may have risk-neutral (RN), stockout-aversion (SA), waste-aversion (WA), and stockout- and waste-aversion (SW) preferences. Through a comparison and analysis of the four cases, we find that the manufacturer's wholesale price increases (decreases) with the SA (WA) coefficient, while the retailer's order quantity is completely the opposite. The manufacturer's wholesale price is the highest in the WA model, followed by the RN, SA and SW models, in that order. The retailer's order quantity is the largest and smallest in the SA and WA models, respectively, while the size of the order quantity between the RN and SW models depends on the ratio m (the ratio of the SA to the WA). Moreover, we also explore the changing trends of the decision-making and profits of the participants and the system profit with the degree of SA and WA, comparing the profits of the four cases.
A R T I C L E I N F O
Keywords • Decision-making strategy; Supply chain management; Waste-averse preferences; Stockout-averse preferences
Corresponding author • Wang, Y.L.
Article history • Received 6 July 2018, Revised 20 August 2018, Accepted 22 August 2018
Published on-line • 21 September 2018
E X P O R T C I T A T I O N
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