Service order allocation under uncertain demand: Risk aversion, peer competition, and relationship strength

Di Wang, Weihua Liu, Xinran Shen and Wanying Wei

Transportation Research Part E: Logistics and Transportation Review, 2019, vol. 130, issue C, 293-311

Abstract: This paper discusses the order allocation in service supply chains under uncertain demand, and builds a Stackelberg game model composed of a service integrator (SI), a key service supplier (SP), and an ordinary SP. The individual impacts of risk aversion, peer competition, and relationship strength, and their interaction impacts are studied. There is an offset effect between risk aversion and relationship strength and an amplification effect between peer competition and relationship strength. Only if three factors meet the equilibrium effect, can SI achieve higher expected utility. The “incentive upgrade and cost sharing” contract is proposed to improve SI’s optimal expected utility.

Keywords: Service supply chain; Order allocation; Relationship strength; Risk aversion; Peer competition (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (14)

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DOI: 10.1016/j.tre.2019.09.005

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