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The optimal multi-period modular design with fairness concerns

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  • Li, Qingying

Abstract

In this paper we consider a multi-period modular design model with fairness concerns. In the first period, market demand information is unknown and the retailer needs to invest in the products' modular design. After market size information becomes available, the retailer trades with the manufacturer in the second period, where we assume either the manufacturer or the retailer has a distributional fairness concern. In each case, we determine the retailer's optimal modular design decision in addition to the retailer and manufacturer's expected profits, and we compare the results with that in the conventional cases. We find that when the manufacturer is fair minded, the double marginalization effect may be exacerbated; while when the retailer is fair minded, the double marginalization effect can be mitigated. However, in both cases, a simple wholesale price contract cannot coordinate the supply chain. Sensitivity analysis is also conducteds.

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  • Li, Qingying, 2018. "The optimal multi-period modular design with fairness concerns," International Journal of Production Economics, Elsevier, vol. 206(C), pages 233-249.
    • Handle: RePEc:eee:proeco:v:206:y:2018:i:c:p:233-249
    DOI: 10.1016/j.ijpe.2018.10.007
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    4. Li, Yadong & Guan, Zhenzhong & Ren, Jianbiao, 2023. "Channel coordination under retailer's (sub)conscious preferences of loss aversion and fairness," Journal of Retailing and Consumer Services, Elsevier, vol. 74(C).
    5. Xuxin Lai & Nengmin Wang & Bin Jiang & Tao Jia, 2024. "Choosing Recovery Strategies for Waste Electronics: How Product Modularity Influences Cooperation and Competition," Sustainability, MDPI, vol. 16(20), pages 1-31, October.
    6. Choi, Tsan-Ming & Guo, Shu, 2020. "Is a ‘free lunch’ a good lunch? The performance of zero wholesale price-based supply-chain contracts," European Journal of Operational Research, Elsevier, vol. 285(1), pages 237-246.
    7. Ciwei Dong & Qingying Li & Bin Shen & Xun Tong, 2019. "Sustainability in Supply Chains with Behavioral Concerns," Sustainability, MDPI, vol. 11(15), pages 1-7, July.
    8. Xiaogang Ma & Chunyu Bao & Jizi Li & Wandong Lou, 2022. "The impact of dual fairness concerns on bargaining game and its dynamic system stability," Annals of Operations Research, Springer, vol. 318(1), pages 357-382, November.
    9. Zhang, Ranran & Ma, Weimin & Si, Hongyun & Liu, Jinjin & Liao, Le, 2021. "Cooperative game analysis of coordination mechanisms under fairness concerns of a green retailer," Journal of Retailing and Consumer Services, Elsevier, vol. 59(C).

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