Coordinating a Behavioral Supply Chain Under Revenue-Sharing Contract

Mohd Mujahid Khan () and B. Vipin ()
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Mohd Mujahid Khan: Indian Institute of Technology
B. Vipin: Indian Institute of Technology

Chapter Chapter 26 in Optimization Essentials, 2024, pp 783-798 from Springer

Abstract: Abstract The chapter introduces supply chain contracts involving nonlinear optimization in the stochastic demand setting. A literature review on prospect theory in supply chain context and theoretical results on the traditional supply chain are provided. This chapter analyzes the performance of a supply chain that includes a behavioral retailer in the context of a revenue-sharing contract using a decision-theoretic framework. We investigate the framework of prospect theory with a nonlinear stochastic reference point to model the retailer’s behavior. We derive the optimal behavioral retailer option under the revenue-sharing contract. The analysis demonstrates that the behavioral supply chain’s revenue-sharing contract can coordinate the supply chain. The chapter concludes with managerial implications and future research initiatives.

Keywords: Behavioral operations management; Prospect theory; Stochastic optimization; Revenue-sharing contract (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:spr:isochp:978-981-99-5491-9_26

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DOI: 10.1007/978-981-99-5491-9_26

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