Abstract
Revenue distribution is an important issue in the operations of a logistics service supply chain (LSSC). The existing works on revenue distribution are mostly based on the assumption of rational economic people that are purely self-interested. However, people also have a fairness preference, which impacts people’s decision-making behavior or even the success operations of the LSSC. For a two-level supply chain consisting of logistics service integrator (LSI) and several functional logistics service providers (FLSP), this paper establishes an improved revenue distribution model considering FLSPs’ inequity aversion. Specifically, the BO model (abbreviation of a model proposed by Bolton and Ockenfels in 2000) is improved to describe the FLSPs’ inequity aversion, which is combined into the conventional revenue distribution model. The proposed model aims to maximize the revenue of logistics service supply chain and obtains the best revenue distribution ratio of each member under equilibrium. In the numerical cases, the impacts of inequity aversion and the number of members with inequity aversion on the revenue distribution are discussed, respectively. The results show that a higher degree of FLSP’s advantageous inequity aversion corresponds to a lower revenue distribution ratio; a higher degree of FLSP’s disadvantageous inequity aversion corresponds to a higher revenue distribution ratio. Increasing the number of FLSP members with inequity aversion results in a higher profit of LSI and lower total utility of FLSPs and the utility of the supply chain. The more FLSP members with inequity aversion there are, the higher the LSI’s profit is, and the lower the total utility of FLSPs and the utility of supply chain are. In addition, the revenue distribution ratio of the FLSP increases with its relative fairness revenue coefficient among FLSPs.
Highlights
Compared with the BO model used in previous research, improved BO model, Equation (18), adopts the difference squared, which to express the advantageous inequity aversion of functional logistics service providers (FLSP), and to show the disadvantageous inequity aversion, and avoids the disadvantage that the utility is increased when the FLSP is at a disadvantage in the foregoing
Fairness preference is introduced into the study of revenue distribution in an logistics service supply chain (LSSC) consisting of one logistics service integrator (LSI) and multiple FLSPs
The influence of FLSP’s inequity aversion degree and the number of FLSP members with inequity aversion on revenue distribution are studied in the numerical simulation
Summary
Publisher’s Note: MDPI stays neutral with regard to jurisdictional claims in published maps and institutional affiliations. When FLSP finds that its revenue is lower than the average level, he will generate disgust and choose negative completion, which is not conducive to supply chain efficiency [9,10,11,12] Researchers define this behavior as peer-induced fairness concern, a common phenomenon in business [11,12]. This paper mainly answers the following questions: (1) What is the impact of FLSP’s fairness preference behavior on the LSSC revenue distribution plan? An improved revenue distribution decision model is established, which aims to maximize the utility of the entire supply chain based on maximizing the LSI’s profit and the FLSPs’ total utility, respectively.
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