Efficiency Evaluation of Two-Stage Supply Chains with Loss Aversion using the Dea-Based Cooperative Approach

Yuanyuan Zhao () and Lei Fang
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Yuanyuan Zhao: Department of Management Science and Engineering, Business School, Nankai University, No. 121 Baidi Road, Nankai District, Tianjin 300071, P. R. China
Lei Fang: Department of Management Science and Engineering, Business School, Nankai University, No. 121 Baidi Road, Nankai District, Tianjin 300071, P. R. China

Asia-Pacific Journal of Operational Research (APJOR), 2023, vol. 40, issue 06, 1-21

Abstract: Most supply chains in reality are composed of multiple enterprises which are independent individuals in terms of organizational structures and operating modes. From the perspective of performance evaluation, optimizing each enterprise’s efficiency independently will probably result in undesired inventory of intermediate products in the supply chain. Taking the two-stage supply chain where the outputs from the upstream supplier are taken as the inputs for the downstream manufacturer as an example, this paper introduces enterprises’ relative dominance into allocating the responsibility of inventory management between two decentralized enterprises. To motivate these enterprises to adopt the allocation strategy, this paper takes the loss aversion of enterprises into account to reveal the utility subjectively perceived by each decentralized enterprise insisting on independence instead of cooperation. Subsequently, a DEA-based cooperative model is developed to readjust the production processes of two decentralized enterprises. We find that adjusting the relevant parameters is able to explore the relationship between the proposed model and the non-cooperative model and the relationship between the proposed model and the centralized model. Finally, a practical example of coordinating sustainable supply chains is applied to illustrate the effectiveness of the proposed model.

Keywords: Two-stage supply chain; data envelopment analysis; relative dominance of enterprises; allocation of responsibility for inventory management; loss aversion (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1142/S0217595922500397

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