 Three-echelon supply chain coordination with a loss-averse retailer and revenue sharing contractsBenyong Hu, Chao Meng, Dong Xu and Young-Jun Son International Journal of Production Economics, 2016, vol. 179, issue C, 192-202 Abstract: This paper studies supply chain coordination via revenue sharing contracts in two different supply chain structures. First, for a three-echelon supply chain with a loss-averse retailer, a loss-neutral distributor, and a loss-neutral manufacturer, we derive the three players’ optimal policies, and find that compared with a loss-neutral scenario, the loss-averse retailer gains fewer profits and a lower utility. Additionally, compared with the loss-neutral scenario, the loss-averse retailer orders less when it faces a high overage cost and orders more when it faces a high shortage cost. Second, for a two-echelon supply chain consisting of a loss-averse retailer and a loss-neutral distributor, we provide the two players’ optimal policies. Third, we derive coordination conditions for the two supply chain structures, and quantify the differences between the three-echelon supply chain and the two-echelon supply chain. Furthermore, we find that Pareto improvement can be achieved under revenue sharing contracts. Keywords: Loss aversion; Revenue sharing contracts; Supply chain coordination (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:proeco:v:179:y:2016:i:c:p:192-202 DOI: 10.1016/j.ijpe.2016.06.001 Access Statistics for this article International Journal of Production Economics is currently edited by Stefan Minner More articles in International Journal of Production Economics from Elsevier |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.