IDEAS home Printed from https://ideas.repec.org/a/ids/ijidsc/v1y2008i1p5-25.html
   My bibliography  Save this article

Coordination of a supply chain with a loss-averse retailer under two types of contracts

Author

Listed:
  • Kuiran Shi
  • Tiaojun Xiao

Abstract

This article studies a one-manufacturer and -retailer supply chain facing uncertain demand. The manufacturer sells a perishable product to the retailer. Different from the traditional supply chain models based on risk neutrality, this article takes the viewpoint of the behavioural theory and assumes that the retailer is loss averse. The objective is to design the supply contract that provides a win-win coordination mechanism between the manufacturer and the retailer. Specifically, two types of contracts, buyback contract and markdown-price contract, are analysed. This article investigates the role of contracts mitigating the loss-aversion effect, which decreases the order quantity of the retailer and the total channel profit. As a comparison, these two types of contracts that ignore loss aversion are also discussed. The analytical and numerical results shed light on how a manufacturer can design a contract to improve the channel performance. In particular, it is shown that these two types of contracts can coordinate the supply chain and arbitrarily allocate the expected channel profit between the manufacturer and the retailer.

Suggested Citation

  • Kuiran Shi & Tiaojun Xiao, 2008. "Coordination of a supply chain with a loss-averse retailer under two types of contracts," International Journal of Information and Decision Sciences, Inderscience Enterprises Ltd, vol. 1(1), pages 5-25.
    • Handle: RePEc:ids:ijidsc:v:1:y:2008:i:1:p:5-25
    as

    Download full text from publisher

    File URL: http://www.inderscience.com/link.php?id=20033
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

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


    Cited by:

    1. Robert Meyer & Joachim Vosgerau & Vishal Singh & Joel Urbany & Gal Zauberman & Michael Norton & Tony Cui & Brian Ratchford & Alessandro Acquisti & David Bell & Barbara Kahn, 2010. "Behavioral research and empirical modeling of marketing channels: Implications for both fields and a call for future research," Marketing Letters, Springer, vol. 21(3), pages 301-315, September.
    2. Sri Vanamalla Venkataraman & Dereje Asfaw, 2020. "Buyback contract under asymmetric information about retailer’s loss aversion nature," Annals of Operations Research, Springer, vol. 295(1), pages 385-409, 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:ids:ijidsc:v:1:y:2008:i:1:p:5-25. 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.

    We have no bibliographic references for this item. You can help adding them by using 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: Sarah Parker (email available below). General contact details of provider: http://www.inderscience.com/browse/index.php?journalID=306 .

    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.