Abstract
Retailer may exhibit irrationality when facing the risk of demand uncertainty; therefore, we consider four retailer behavioral preferences: risk neutral (RN), waste aversion (WA), stockout aversion (SA), and stockout-waste aversion (SW). The decision-making and contract choice of upstream and downstream enterprises in cases where demand depends on supplier’s effort are studied. The results show that if the retailer has only SA or RN preferences, then the supplier prefers to choose a wholesale price contract, while the retailer does the opposite, if the retailer has only WA, then the supplier prefers to choose a revenue sharing contract, but the retailer’s contract choice depends on the degree of waste aversion, and if the retailer has SW, then the contract choice of upstream and downstream enterprises is related to the degree of waste aversion and stockout aversion.
Highlights
Because different contracts may bring different benefits to supply chain participants, different participants choose different contracts. e concept of supply chain contract choice comes from the term “prefer” proposed by Cachon and Lariviere [1], who noted that the supplier prefers contracts that is more profitable to him based on different circumstances
The research on contract choice is still very limited, and most of the existing literature focuses on the choice between wholesale price contract and revenue-sharing contract, which is the content of this paper. e reason for choosing the two contracts in this paper is that the two contracts are simple and the two contracts are widely used in real life
(3) When the retailer has stockout-waste aversion (SW), the retailer will order more under the RS model, and the supplier’s effort input level between the two contracts depends on the degree of waste aversion and stockout aversion
Summary
Because different contracts may bring different benefits to supply chain participants, different participants choose different contracts. e concept of supply chain contract choice comes from the term “prefer” proposed by Cachon and Lariviere [1], who noted that the supplier prefers contracts that is more profitable to him based on different circumstances. To weigh the advantages and disadvantages of the above two contracts, Cachon and Lariviere [1] analyze the contract selection of upstream enterprises when product quantity and retailer effort influence product price. Jin et al [4] study the contract choice under different agents who make decisions about effort when demand is affected by retail price and effort and the retailer has financial constraints. Discrete Dynamics in Nature and Society erefore, the two behavior preferences are introduced into the supply chain, especially considering that random demand is affected by the supplier’s effort (e.g., advertising, quality, services to enhance the physical store, and after-sales service [12,13,14,15]). Is paper studies the decision-making and contract choice of upstream and downstream enterprises in the supply chain under different behavior preferences of the retailer Discrete Dynamics in Nature and Society erefore, the two behavior preferences are introduced into the supply chain, especially considering that random demand is affected by the supplier’s effort (e.g., advertising, quality, services to enhance the physical store, and after-sales service [12,13,14,15]). is paper studies the decision-making and contract choice of upstream and downstream enterprises in the supply chain under different behavior preferences of the retailer
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