Differential pricing decision and coordination strategy in closed-loop supply chain considering fairness concerns

CAO Xiaogang, HUANG Mei

Systems Engineering - Theory & Practice ›› 2019, Vol. 39 ›› Issue (9) : 2300-2314.

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Systems Engineering - Theory & Practice ›› 2019, Vol. 39 ›› Issue (9) : 2300-2314. DOI: 10.12011/1000-6788-2018-1682-15

Differential pricing decision and coordination strategy in closed-loop supply chain considering fairness concerns

  • CAO Xiaogang1,3, HUANG Mei1
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Abstract

This paper studies the optimal decision and coordination strategy of differential pricing for members and the whole system under the consideration of the fairness concerns of the members of the closed-loop supply chain, and analyzes the influence of fair concerns on the decision-making by comparing the results of fair neutral and fair concerns. The results show that the manufacturer's fairness concern affects the decisions of the closed-loop supply chain members and the whole system, and it's bad for the manufacturer, the retailer and the whole system. The retailer's fair concern behavior is unfavorable to the manufacturer and beneficial to the retailer, which makes the profit of both decrease and increase, but the whole system profit remains the same and the product price, the sales volume is not affected by the retailer's fair concern behavior. When both the manufacturer and retailer have the behavior of fair concerns, it is beneficial to the manufacturer when the level of fair concern of both sides increases gradually, and it is beneficial to the retailer when the level of fair concern of manufacturer decreases, and the degree of fair concern of the retailer increases. At the same time, this paper adopts the revenue-sharing contract to coordinate the closed-loop supply chain when only the manufacturer has fairness concern and only the retailer has fairness concern behavior to achieve Pareto improvement of both parties.

Key words

closed-loop supply chain / fairness concerns / differential pricing / revenue sharing contract

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CAO Xiaogang, HUANG Mei. Differential pricing decision and coordination strategy in closed-loop supply chain considering fairness concerns. Systems Engineering - Theory & Practice, 2019, 39(9): 2300-2314 https://doi.org/10.12011/1000-6788-2018-1682-15

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Funding

National Natural Science Foundation of China (71301126, 71871171); Special Soft Science Research Project of Technological Innovation in Hubei Province (2018ADC057); The Key Research Base of Humanities and Social Sciences in Colleges and Universities in Hubei Province-Enterprise Decision Support Research Center Project (DSS20180603)
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