A multi-period supply chain network equilibrium model considering retailers’ uncertain demands and dynamic loss-averse behaviors

Abstract

This study constructs an equilibrium model of a multi-period supply chain network with uncertain demand. In the multi-period equilibrium model, we consider not only retailers’ static loss-averse behaviors, but also their dynamic loss-averse behaviors, in which retailers dynamically adjust their loss-averse parameters according to their gains or losses over the production periods. The equilibrium conditions of the various decision makers and the network are established by the finite-dimensional variational inequality. Finally, numerical examples are solved to show how retailers’ loss-averse behaviors would affect decisions, profits of manufacturers and utilities of retailers at equilibrium when compared with their loss-neutral behaviors.