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Service quality guarantee design: obedience behavior, demand updating and information asymmetry

Author

Listed:
  • Weihua Liu

    (Tianjin University)

  • Xinran Shen

    (Tianjin University)

  • Di Wang

    (Tianjin University)

  • Donglei Zhu

    (Tianjin University)

Abstract

With the increasingly fierce market competition and the rapid development of advanced logistics technology, service quality guarantee and demand updating become effective ways to promote procurement decisions in logistics supply chain. However, information asymmetry and obedience behavior have made it more complicated. In this paper, we considered the above factors, and studied the capacity procurement issue in a logistics service supply chain consisting of a logistics service integrator (LSI) and a functional logistics service provider (FLSP) in two periods. First, we find the optimal purchase quantities increase with the FLSP’s obedience factor, in specific conditions, the LSI’s guaranteed service quality and FLSP’s obedience behavior can reach the upper limit (or lower limit). Second, the information symmetry creates a win–win situation iff the penalty cost to the FLSP is moderate and the demand is incompletely revealed. Third, demand updating relaxes the condition for the LSI’s service quality guarantee reaching to the upper limit. For FLSP, when the penalty cost is moderate, the demand updating makes FLSP less obedient in case that the demand is completely revealed and more obedient when the demand is incompletely revealed.

Suggested Citation

  • Weihua Liu & Xinran Shen & Di Wang & Donglei Zhu, 2023. "Service quality guarantee design: obedience behavior, demand updating and information asymmetry," Annals of Operations Research, Springer, vol. 329(1), pages 157-189, October.
    • Handle: RePEc:spr:annopr:v:329:y:2023:i:1:d:10.1007_s10479-020-03623-7
    DOI: 10.1007/s10479-020-03623-7
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