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CN 34-1054/N

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Open AccessOpen Access JUSTC Original Paper

Supply chain optimization based on Shapley fair theory

  • School of Management, University of Science and Technology of China, Hefei 230026, China

Cite this:
https://doi.org/10.3969/j.issn.0253-2778.2015.06.011
  • Received Date: 17 September 2014
  • Accepted Date: 20 March 2015
  • Rev Recd Date: 20 March 2015
  • Publish Date: 30 June 2015
    Abstract

  • Abstract

    A supply chain system with one supplier and two homogeneous retailers was considered to investigate the influence of retailers fairness concern on the supply chain and its members decision by using the Shapley fair distribution theory. Through modeling and behavioral analysis, it was found that retailers fairness concern will reduce suppliers optimal wholesale price and improves retailers own optimal order quantity in equilibrium. Besides, retailers fairness concern also increases their profit shares as well as channel profits, which leads to a higher supply chain efficiency.

    Abstract

    A supply chain system with one supplier and two homogeneous retailers was considered to investigate the influence of retailers fairness concern on the supply chain and its members decision by using the Shapley fair distribution theory. Through modeling and behavioral analysis, it was found that retailers fairness concern will reduce suppliers optimal wholesale price and improves retailers own optimal order quantity in equilibrium. Besides, retailers fairness concern also increases their profit shares as well as channel profits, which leads to a higher supply chain efficiency.
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    • References(21)
  • [1]
    Fehr E, Schmidt K M. A theory of fairness, competition, and cooperation[J]. Quarterly Journal of Economics, 1999， 114（3）: 817-868.
    [2]
    Kahneman D, Knetsch J L, Thaler R. Fairness as a constraint on profit seeking: Entitlements in the market[J]. The American Economic Review, 1986, 76: 728-741.
    [3]
    Geyskens I, Steenkamp J B E M, Kumar N. Generalizations about trust in marketing channel relationships using meta-analysis [J]. International Journal of Research in Marketing, 1998, 15(3): 223-248.
    [4]
    Corsten D, Kumar N. Profits in the pie of the beholder[J]. Harvard Business Review, 2003, 81(5): 22-23.
    [5]
    Corsten D, Kumar N. Do suppliers benefit from collaborative relationships with large retailers? An empirical investigation of efficient consumer response adoption[J]. Journal of Marketing, 2005, 69(3): 80-94.
    [6]
    Cui T H, Raju J S, Zhang Z J. Fairness and channel coordination[J]. Management Science, 2007, 53(8): 1 303-1 314.
    [7]
    Pavlov V,Katok E. Fairness and coordination failures in supply chain contracts[R]. University Park, Pennsylvania: Smeal College of Business, The Pennsylvania State University, 2009.
    [8]
    Katok E, Pavlov V. Fairness in supply chain contracts: A laboratory study[J]. Journal of Operations Management, 2013, 31(3): 129-137.
    [9]
    Ho T H, Zhang J. Designing pricing contracts forboundedly rational customers: Does the framing of the fixed fee matter?[J]. Management Science, 2008, 54(4): 686-700.
    [10]
    Du Shaofu, Du Chan, Liang Liang, et al. Supply chain coordination considering fairness concerns[J]. Journal of Management Sciences in China, 2010, 13(11): 41-48.
    杜少甫, 杜婵, 梁樑,等. 考虑公平关切的供应链契约与协调[J]. 管理科学学报, 2010, 13(11): 41-48.
    [11]
    Ho T H, Su X. Peer-induced fairness in games[J]. The American Economic Review, 2009, 99(5): 2 022-2 049.
    [12]
    Ho T H, Su X, Wu Y. Distributional and peer-induced fairness in supply chain contract design[J]. Production and Operations Management, 2014, 23(2): 161-175.
    [13]
    Bolton G E. A comparative model of bargaining: Theory and evidence[J]. The American Economic Review, 1991, 81(5): 1 096-1 136.
    [14]
    Rabin M. Incorporating fairness into game theory and economics[J]. The American Economic Review, 1993, 83(5): 1 281-1 302.
    [15]
    Konrad K A, Lommerud K E. Relative standing comparisons, risk taking, and safety regulations[J]. Journal of Public Economics, 1993, 51(3): 345-358.
    [16]
    De Bruyn A, Bolton G E. Estimating the influence of fairness on bargaining behavior[J]. Management Science, 2008, 54(10): 1 774-1 791.
    [17]
    Loch C H, Wu Y. Social preferences and supply chain performance: An experimental study[J]. Management Science, 2008, 54(11): 1 835-1 849.
    [18]
    Du S,Nie T, Chu C, et al. Newsvendor model for a dyadic supply chain with Nash bargaining fairness concerns[J]. International Journal of Production Research, 2014, 52(17): 5 070-5 085.
    [19]
    Du Shaofu, Zhu Jiaang, Gao Dong, et al. Optimal decision-making for Nash bargaining fairness concerned newsvendor in two-level supply chain[J]. Journal of Management Sciences in China, 2013, 16(3): 68-72,81.
    杜少甫, 朱贾昂, 高冬, 等. Nash讨价还价公平参考下的供应链优化决策[J]. 管理科学学报, 2013, 16(3): 68-72,81.
    [20]
    Shapley L S. A value for n-person games[R]. Santa Monica, CA: Rand Corp, 1952.
    [21]
    Su X. Bounded rationality in newsvendor models[J]. Manufacturing & Service Operations Management, 2008, 10(4): 566-589.
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    [1]
    Fehr E, Schmidt K M. A theory of fairness, competition, and cooperation[J]. Quarterly Journal of Economics, 1999， 114（3）: 817-868.
    [2]
    Kahneman D, Knetsch J L, Thaler R. Fairness as a constraint on profit seeking: Entitlements in the market[J]. The American Economic Review, 1986, 76: 728-741.
    [3]
    Geyskens I, Steenkamp J B E M, Kumar N. Generalizations about trust in marketing channel relationships using meta-analysis [J]. International Journal of Research in Marketing, 1998, 15(3): 223-248.
    [4]
    Corsten D, Kumar N. Profits in the pie of the beholder[J]. Harvard Business Review, 2003, 81(5): 22-23.
    [5]
    Corsten D, Kumar N. Do suppliers benefit from collaborative relationships with large retailers? An empirical investigation of efficient consumer response adoption[J]. Journal of Marketing, 2005, 69(3): 80-94.
    [6]
    Cui T H, Raju J S, Zhang Z J. Fairness and channel coordination[J]. Management Science, 2007, 53(8): 1 303-1 314.
    [7]
    Pavlov V,Katok E. Fairness and coordination failures in supply chain contracts[R]. University Park, Pennsylvania: Smeal College of Business, The Pennsylvania State University, 2009.
    [8]
    Katok E, Pavlov V. Fairness in supply chain contracts: A laboratory study[J]. Journal of Operations Management, 2013, 31(3): 129-137.
    [9]
    Ho T H, Zhang J. Designing pricing contracts forboundedly rational customers: Does the framing of the fixed fee matter?[J]. Management Science, 2008, 54(4): 686-700.
    [10]
    Du Shaofu, Du Chan, Liang Liang, et al. Supply chain coordination considering fairness concerns[J]. Journal of Management Sciences in China, 2010, 13(11): 41-48.
    杜少甫, 杜婵, 梁樑,等. 考虑公平关切的供应链契约与协调[J]. 管理科学学报, 2010, 13(11): 41-48.
    [11]
    Ho T H, Su X. Peer-induced fairness in games[J]. The American Economic Review, 2009, 99(5): 2 022-2 049.
    [12]
    Ho T H, Su X, Wu Y. Distributional and peer-induced fairness in supply chain contract design[J]. Production and Operations Management, 2014, 23(2): 161-175.
    [13]
    Bolton G E. A comparative model of bargaining: Theory and evidence[J]. The American Economic Review, 1991, 81(5): 1 096-1 136.
    [14]
    Rabin M. Incorporating fairness into game theory and economics[J]. The American Economic Review, 1993, 83(5): 1 281-1 302.
    [15]
    Konrad K A, Lommerud K E. Relative standing comparisons, risk taking, and safety regulations[J]. Journal of Public Economics, 1993, 51(3): 345-358.
    [16]
    De Bruyn A, Bolton G E. Estimating the influence of fairness on bargaining behavior[J]. Management Science, 2008, 54(10): 1 774-1 791.
    [17]
    Loch C H, Wu Y. Social preferences and supply chain performance: An experimental study[J]. Management Science, 2008, 54(11): 1 835-1 849.
    [18]
    Du S,Nie T, Chu C, et al. Newsvendor model for a dyadic supply chain with Nash bargaining fairness concerns[J]. International Journal of Production Research, 2014, 52(17): 5 070-5 085.
    [19]
    Du Shaofu, Zhu Jiaang, Gao Dong, et al. Optimal decision-making for Nash bargaining fairness concerned newsvendor in two-level supply chain[J]. Journal of Management Sciences in China, 2013, 16(3): 68-72,81.
    杜少甫, 朱贾昂, 高冬, 等. Nash讨价还价公平参考下的供应链优化决策[J]. 管理科学学报, 2013, 16(3): 68-72,81.
    [20]
    Shapley L S. A value for n-person games[R]. Santa Monica, CA: Rand Corp, 1952.
    [21]
    Su X. Bounded rationality in newsvendor models[J]. Manufacturing & Service Operations Management, 2008, 10(4): 566-589.
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