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Optimal Strategy of Social Responsibility and Quality Effort in Service Supply Chain with Quality Preference

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  • Cui-Hua Zhang

    (Department of Industrial Engineering, School of Business Administration, Northeastern University, Shenyang, Liaoning 110819, P. R. China)

  • Peng Xing

    (Department of Management Science and Engineering, Business School, Liaoning University, Shenyang, Liaoning 110136, P. R. China)

  • Jin Li

    (Department of Management and Marketing, College of Business, North Dakota State University, Fargo, ND 58104, USA)

Abstract

We investigate the optimal strategy of service supply chain (SSC) including one integrator and two suppliers under a two-layer game structure. Service integrator decides social responsibility and service price, while the two service suppliers with quality preference determine their quality efforts, respectively. By analyzing the two-layer game structure and eight different scenarios of decision models (i.e., CD, DD, ICD, IDD, ISD, SCD, SDD, and SSD), we establish members’ utility functions under different decision models. Meanwhile, based on game theory, the optimal strategies of SSC are obtained. Mathematical reasoning and numerical simulations show that, firstly, quality preference has impact on optimal strategy and members’ utilities under different constraints. Secondly, utility of supply chain with integrator as a leader is greater than the case with suppliers as the leader.

Suggested Citation

  • Cui-Hua Zhang & Peng Xing & Jin Li, 2018. "Optimal Strategy of Social Responsibility and Quality Effort in Service Supply Chain with Quality Preference," Asia-Pacific Journal of Operational Research (APJOR), World Scientific Publishing Co. Pte. Ltd., vol. 35(03), pages 1-43, June.
    • Handle: RePEc:wsi:apjorx:v:35:y:2018:i:03:n:s0217595918500185
    DOI: 10.1142/S0217595918500185
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