Research On Firms’ Farsighted Vs.myopic Behaviors In The Dynamic Supply Chain

Facing the increasingly complex and changeable market environment,firms in the supply chain will choose different decision-making behavior patterns for response according to their own characteristics.Furthermore,advances in technology makes it possible to set strategies dynamically.In order to understand the interactions between behaviors and the dynamic market environment more clearly,this thesis takes the dynamic supply chain as the research background and applies many theories and methods,such as behavioral operations management,marketing management,optimal control theory and differential game theory,to carry on a deep discussion about the farsighted and myopic behaviors of chain members.The main findings are listed as follows:First,taking sticky price into account,this thesis studies the impacts of the cooperative advertising on firms’ choices between farsighted and myopic behaviors.Based on the cooperative advertising mechanism,this thesis models the product sales price dynamics which captures the price stickiness and formulates a manufacturer-retailer Stackelberg differential game.The manufacturer decides the wholesale price,while the retailer determines the order quantity and advertising level.Supposing that both members can choose to be farsighted or myopic,this thesis investigates the behaviorchoice game of channel members,and then explores the impacts of co-op advertising on the game result.Results show that,the farsighted behavior is the equilibrium of the behavior-choice game.When the effectiveness of retailer’s advertising is relatively low,chain members are trapped into a prisoner’s dilemma;when both the effectiveness of retailer’s advertising and manufacturer’s advertising subsidy rate are sufficiently high,chain members can effectively get out of the prisoner’s dilemma and achieve their Pareto optimality at the farsighted equilibrium.Additionally,selling the product with low degree of price stickiness or determining advertising subsidy rate by negotiation helps the players escape from the prisoner’s dilemma more easily.Next,this thesis studies the effects of dynamic advertising and sticky price on competitive firms’ behavior choices.Consider a two-tier supply chain composed of one manufacturer and two competing retailers.Both retailers can choose to be farsighted or myopic.This thesis constructs the sales price dynamics equation and formulates a differential game.By analyzing and comparing members’ equilibrium strategies and profits under four behavioral combinations cases,this thesis explores the impacts of dynamic advertising and sticky price on competitive retailers’ behavior-choice game results.Results indicate that,when the price is sticky enough,acting farsightedly is the game equilibrium.When the advertising effectiveness is relatively low,farsighted equilibrium leads to a conflict of interest;when the advertising is very effective,farsighted behavior can make all members achieve multi-win situation.In contrast,when the price adjustment is very flexible,two behavior-choice equilibria may emerge: Both retailers choose to act myopically which benefits all members,or to behave farsightedly which traps retailers into a prisoner’s dilemma and causes a profit loss for the manufacturer.Then,this thesis explores the impacts of firms’ behavior patterns on dynamic pricing and advertising strategies under different channel structures.In order to explore the effects of behavior patterns and channel structures on the equilibrium strategies and profits of chain members,this thesis builds evolution equations of product goodwill and cumulative sales,and analyzes the dynamic pricing and advertising strategies of farsighted and myopic channel members under centralized and decentralized channel structures,respectively.Results show that,when channel members are myopic,the entire system profit of decentralized channel is higher than that of centralized channel;when channel members are farsighted,the opposite is true.Meanwhile,in the decentralized channel,the myopic channel members are better off than the farsighted ones.Finally,considering the dynamic advertising,this thesis investigates the impacts of firms’ behaviors on their contract selections.The supply chain is composed of one dominant retailer and one manufacturer.The dynamic advertising can affect the evolution of product goodwill.This thesis develops a retailer-manufacturer Stackelberg differential game,and analyzes the equilibrium strategies and profits of the farsighted and myopic channel members under wholesale price and consignment contracts,respectively.The objective is to explore the impacts of behavior patterns on contract preferences of members,entire system and consumers.Results show that,when members are farsighted,the dominant retailer and consumers always prefer the consignment contract.When the advertisement is effective enough or chain members have enough patience,chain members can achieve Pareto improvement under the consignment contract;otherwise,it leads to a conflict of contract choices for chain members.In contrast,the consignment contract benefits the myopic chain members and consumers.