Representation of loss aversion and impatience concerning time utility in supply chains

Abstract

The paper deals with the investigation of the critical time factor of supply chain. The literature review gives a background to understand and handle the reasons and consequences of the growing importance of time, and the phenomenon of time inconsistency. By using utility functions to represent the value of various delivery-times for the different participants in the supply chain, including the final customers, it is shown that the behaviour and willingness of payment of time-sensitive and non time-sensitive consumers are different for varying lead times. Longer lead times not only generate less utility but impatience influences the decision makers, that is the time elasticity is not constant but it is function of time. For optimization soft computing techniques (particle swarm optimization in this paper) can be efficiently applied. © 2011 Springer-Verlag Berlin Heidelberg.