Decision-making strategies in supply chain management with a waste-averse and stockout-averse manufacturer

Abstract

Behavioral preferences is an important factor that affects the decision-making strategies of enterprises. Usually, the behavioral preferences will lead to deci-sion-making that deviates from profit maximization. In this study, we investi-gate the influence of a dominant manufacturer's behavioral preferences on decision-making and subsequent impact on profits. This study looks at the profits of the manufacturer, retailer and the system as a whole. We construct a two-stage supply chain involving a retailer and a manufacturer who may have risk-neutral (RN), stockout-aversion (SA)waste-aversion (WA) and stockout-and waste-aversion (SW) preferences. Through a comparison and analysis of the four cases, we find that the manufacturer's wholesale price increases (decreases) with the S)(WAcoefficient, while the retailer's order quantity is completely the opposite. The manufacturer's wholesale price is the highest in the model, followed by the and models, in that order. The retailer's order quantity is the largest and smallest in the and models, respectively, while the size of the order quantity between the WA and models depends on the ratio the ratio of the to the). More-over, we also explore the changing trends of the decision-making and profits of the participants and the system profit with the degree of and, comparing the profits of the four cases.