IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v14y2022i16p10338-d892623.html
   My bibliography  Save this article

Research on Supply Chain Quality Decision Model Considering Reference Effect and Competition under Different Decision-Making Modes

Author

Listed:
  • Minglin Jiang

    (Business School, Minnan Normal University, Zhangzhou 363000, China)

  • Xiaowei Lin

    (Business School, Minnan Normal University, Zhangzhou 363000, China)

  • Xideng Zhou

    (School of Economics and Management, Yuzhang Normal University, Nanchang 330099, China)

  • Hongfang Qiao

    (Business School, Minnan Normal University, Zhangzhou 363000, China)

Abstract

The reference effect of consumers’ product quality and service quality is an important behavioral factor that affects consumers’ purchase decisions. In this paper, considering the inherent dynamics of the operation mode, the two were combined into a product-service supply chain composed of a manufacturer and two competitive retailers, and the service reference effect was further divided into horizontal and vertical service reference effects. Differential game models between the manufacturer and the retailers were constructed. Using the continuous dynamic programming theory, the manufacturer’s quality level strategy, retailer’s service level strategy and supply chain system performance under the modes of no cost sharing decision, cost sharing decision and centralized decision were analyzed and compared. Main findings: The optimal strategy of product quality under centralized decision is greater than the corresponding value under cost sharing contract decision. Compared with decentralized decision making of no cost sharing, cost sharing contract cannot promote the manufacturer to improve product quality. Different from previous studies, the service quality under centralized decision making is not higher than other decisions. When the horizontal reference effect of service quality meets a certain condition, the supply chain profit under centralized decision making is lower than the corresponding value under decentralized decision making.

Suggested Citation

  • Minglin Jiang & Xiaowei Lin & Xideng Zhou & Hongfang Qiao, 2022. "Research on Supply Chain Quality Decision Model Considering Reference Effect and Competition under Different Decision-Making Modes," Sustainability, MDPI, vol. 14(16), pages 1-20, August.
    • Handle: RePEc:gam:jsusta:v:14:y:2022:i:16:p:10338-:d:892623
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/14/16/10338/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/14/16/10338/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Mandal, Prasenjit & Jain, Tarun, 2021. "Partial outsourcing from a rival: Quality decision under product differentiation and information asymmetry," European Journal of Operational Research, Elsevier, vol. 292(3), pages 886-908.
    2. Kihlstrom, Richard E & Riordan, Michael H, 1984. "Advertising as a Signal," Journal of Political Economy, University of Chicago Press, vol. 92(3), pages 427-450, June.
    3. Li, Jian & Wang, Shouyang & Cheng, T.C.E., 2010. "Competition and cooperation in a single-retailer two-supplier supply chain with supply disruption," International Journal of Production Economics, Elsevier, vol. 124(1), pages 137-150, March.
    4. Milgrom, Paul & Roberts, John, 1986. "Price and Advertising Signals of Product Quality," Journal of Political Economy, University of Chicago Press, vol. 94(4), pages 796-821, August.
    5. Yanyan He & Juan Zhang & Qinglong Gou & Gongbing Bi, 2018. "Supply chain decisions with reference quality effect under the O2O environment," Annals of Operations Research, Springer, vol. 268(1), pages 273-292, September.
    6. Amos Tversky & Daniel Kahneman, 1991. "Loss Aversion in Riskless Choice: A Reference-Dependent Model," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 106(4), pages 1039-1061.
    7. Gadi Fibich & Arieh Gavious & Oded Lowengart, 2003. "Explicit Solutions of Optimization Models and Differential Games with Nonsmooth (Asymmetric) Reference-Price Effects," Operations Research, INFORMS, vol. 51(5), pages 721-734, October.
    8. Lejarza, Fernando & Baldea, Michael, 2022. "An efficient optimization framework for tracking multiple quality attributes in supply chains of perishable products," European Journal of Operational Research, Elsevier, vol. 297(3), pages 890-903.
    9. Bruce G. S. Hardie & Eric J. Johnson & Peter S. Fader, 1993. "Modeling Loss Aversion and Reference Dependence Effects on Brand Choice," Marketing Science, INFORMS, vol. 12(4), pages 378-394.
    10. Jonathan P. Caulkins & Gustav Feichtinger & Josef Haunschmied & Gernot Tragler, 2006. "Quality Cycles and the Strategic Manipulation of Value," Operations Research, INFORMS, vol. 54(4), pages 666-677, August.
    11. Wenhuan Wang & Jianping Wei & Dan Wu, 2022. "The Optimal Strategy of China’s Plastic Drinking Straws Ban Based on Consumer Heterogeneity and Retailer Competition," Sustainability, MDPI, vol. 14(2), pages 1-19, January.
    12. Glock, C. H. & Kim, T., 2015. "The effect of forward integration on a single-vendor-multi-retailer supply chain under retailer competition," Publications of Darmstadt Technical University, Institute for Business Studies (BWL) 72130, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL).
    13. Fan, Jianchang & Ni, Debing & Fang, Xiang, 2020. "Liability cost sharing, product quality choice, and coordination in two-echelon supply chains," European Journal of Operational Research, Elsevier, vol. 284(2), pages 514-537.
    14. He, Zhou & Wang, Shouyang & Cheng, T.C.E., 2013. "Competition and evolution in multi-product supply chains: An agent-based retailer model," International Journal of Production Economics, Elsevier, vol. 146(1), pages 325-336.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Yiling Li & Xiaowei Lin & Xideng Zhou & Minglin Jiang, 2022. "Supply Chain Quality Decisions with Reference Effect under Supplier Competition Environment," Sustainability, MDPI, vol. 14(22), pages 1-20, November.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Necati Tereyağoğlu & Peter S. Fader & Senthil Veeraraghavan, 2018. "Multiattribute Loss Aversion and Reference Dependence: Evidence from the Performing Arts Industry," Management Science, INFORMS, vol. 64(1), pages 421-436, January.
    2. Sergi Jiménez-Martín & Antonio Ladrón de Guevara-Martínez, 2009. "A state-dependent model of hybrid behavior with rational consumers in the attribute space," Investigaciones Economicas, Fundación SEPI, vol. 33(3), pages 347-383, September.
    3. Zhou Xideng & Xu Bing & Xie Fei & Li Yu, 2020. "Research on Quality Decisions and Coordination with Reference Effect in Dual-Channel Supply Chain," Sustainability, MDPI, vol. 12(6), pages 1-23, March.
    4. Arnoud V. den Boer & N. Bora Keskin, 2022. "Dynamic Pricing with Demand Learning and Reference Effects," Management Science, INFORMS, vol. 68(10), pages 7112-7130, October.
    5. Yanyan He & Juan Zhang & Qinglong Gou & Gongbing Bi, 2018. "Supply chain decisions with reference quality effect under the O2O environment," Annals of Operations Research, Springer, vol. 268(1), pages 273-292, September.
    6. Kyle Bagwell & Garey Ramey, 1988. "Advertising and Limit Pricing," RAND Journal of Economics, The RAND Corporation, vol. 19(1), pages 59-71, Spring.
    7. repec:ebl:ecbull:v:10:y:2004:i:8:p:1-8 is not listed on IDEAS
    8. Thomas de Haan & Theo Offerman & Randolph Sloof, 2015. "Money Talks? An Experimental Investigation Of Cheap Talk And Burned Money," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 56(4), pages 1385-1426, November.
    9. Hattori, Keisuke & Higashida, Keisaku, 2014. "Misleading advertising and minimum quality standards," Information Economics and Policy, Elsevier, vol. 28(C), pages 1-14.
    10. Pracejus, John W. & O'Guinn, Thomas C. & Olsen, G. Douglas, 2013. "When white space is more than “burning money”: Economic signaling meets visual commercial rhetoric," International Journal of Research in Marketing, Elsevier, vol. 30(3), pages 211-218.
    11. Pedro M. Gardete & Liang Guo, 2021. "Prepurchase Information Acquisition and Credible Advertising," Management Science, INFORMS, vol. 67(3), pages 1696-1717, March.
    12. Vishal Gaur & Young-Hoon Park, 2007. "Asymmetric Consumer Learning and Inventory Competition," Management Science, INFORMS, vol. 53(2), pages 227-240, February.
    13. Ignatius J. Horstmann & Glenn M. MacDonald, 1994. "When Is Advertising a Signal of Product Quality?," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 3(3), pages 561-584, September.
    14. Eric Johnson & Simon Gaechter & Andreas Herrmann, 2006. "Exploring the Nature of Loss Aversion," Discussion Papers 2006-02, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
    15. C F Elliott & R Simmons, 2007. "Determinants of UK box office success: the impact of quality signals," Working Papers 584026, Lancaster University Management School, Economics Department.
    16. Eric Rasmusen, 2008. "Quality-Ensuring Profits," Working Papers 2008-10, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy.
    17. Laurent Cavenaile & Pau Roldan-Blanco, 2021. "Advertising, Innovation, and Economic Growth," American Economic Journal: Macroeconomics, American Economic Association, vol. 13(3), pages 251-303, July.
    18. Jie Bai, 2016. "Melons as Lemons: Asymmetric Information, Consumer Learning and Seller Reputation," Natural Field Experiments 00540, The Field Experiments Website.
    19. Javad Nasiry & Ioana Popescu, 2011. "Dynamic Pricing with Loss-Averse Consumers and Peak-End Anchoring," Operations Research, INFORMS, vol. 59(6), pages 1361-1368, December.
    20. Schumacher, Heiner, 2014. "Incentives through consumer learning about tastes," International Journal of Industrial Organization, Elsevier, vol. 37(C), pages 170-177.
    21. Lola Esteban & José M. Hernández & José Luis Moraga‐González, 2006. "Customer Directed Advertising and Product Quality," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 15(4), pages 943-968, December.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jsusta:v:14:y:2022:i:16:p:10338-:d:892623. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.