Study on Supply Chain considering Anticipated Regret under Price Discount

Nian Zhang,Bin Li

doi:10.1155/2020/1574716

Abstract

The aim of this study is to research the impact of consumer regrets on the supply chain caused by the company’s “discount promotion.” This paper introduces the theory of anticipated regret and price discount into the supply chain. By quoting the negative utility formula of consumers’ anticipated regret under price discount, it quantitatively describes the demand function of the original product and the discount product. The model under centralized and decentralized decision making is constructed, and revenue-sharing contract is adopted to coordinate the supply chain. The conclusions are as follows. (1) Affected by the anticipated regret under the price discount, the price of the product increases first and then decreases with the regret sensitivity coefficient and consumer heterogeneity sensitivity increases. In addition, the price under the leadership structure of the manufacturer is the highest. (2) Price discounts enhance consumers’ perception of anticipated regret. Under the stimulation of price discounts, the price of products increases first and then decreases. (3) The revenue-sharing contract could not coordinate the supply chain, and the introduction of a profit-sharing mechanism is achieved the Pareto improvement of the supply chain.

Highlights

Introduction eCOVID-19 outbreak at the end of 2019 has directly hit the world economy [1]
After introducing the contract mechanism to coordinate the decentralized decision making, we can see that when the profit-sharing coefficient satisfies 0 ≤ φ ≤ 1, there are always πCmO > πdm, πCr O > πdr, and πCO > πd. is proves that the design of profitsharing mechanism increases the profits of the manufacturer and the retailer under decentralized decision making, and the overall profit of the supply chain reaches the total profits of the centralized decision-making supply chain. e contract allocation mechanism well coordinates the decentralized supply chain and realizes the “win-win” of manufacturers and retailers in the supply chain
When 0 ≤ φ ≤ 1, with the increase in φ, the manufacturer’s profit under the profit-sharing mechanism is gradually reduced and the retailer’s profit is gradually increased, and the profit after the manufacturer and the retailer distribute according to any proportion is greater than the profit when the two sides do not cooperate. e total profit of the supply chain coordinated by the profit-sharing contract is always greater than the total profit of the supply chain under the

Summary

Problem Description and Assumptions

Enterprises often use the means of “discount promotion” to attract customers. At present, many merchants have announced the future price discount of products before the “Double 11” Carnival, which enables consumers to know the discount information in advance and further increases the regret emotion of consumers in the purchase decision process of original price products and discount products. Erefore, the net utility functions of consumers’ regret for purchasing original price products and discount products are as follows: Complexity. Erefore, consumers’ demand functions for original price products (2) and discount products are as follows: Dn. In the game model, when 0 ≤ pn ≤ (c/2 − 2δ), consumers would purchase both original price products and discount products. To research consumers’ anticipated regret under the price discount and make sure there are two products on the market, we only consider 0 ≤ pn ≤ (c/2− 2δ). In order to ensure that the supply chain enterprises are profitable, the retail price of products needs to satisfy the inequality 0 ≤ pn ≤ (c/2 − 2δ), and the demand functions of the original price products and the discount products are as follows: Dn 1 + 2pnA,

Supply Chain Decision-Making Model

Revenue-Sharing Coordination

Numerical Simulation

Conclusion