Inventory And Pricing Decisions Under Supply Chain Contract With Fairness Concerns

In recent years, with the development of economic globalization, corporate decision-making has been the local optimization into the system optimization. Therefore, the supply chain management that integration, cooperation and win-win are the core idea is becoming increasingly important. In order to achieve coordina-tion among the various members of the supply chain, the supply chain contract is an effective solution. However, the traditional research assumes that the decision makers are completely rational, i.e., the decision makers maximize the benefit as the code of conduct.Behavioral studies have found that fairness concerns are a very important faith in human society, which affects the people’s actions. Fairness concerns play a very important role in the supply chain management that influences each other mem-bers in the supply chain’s decision-making. Therefore, when the retailer faces the stochastic multiplicative demand, and the manufacturer acts as a leader in Stack-elberg game, we study how fairness concerns affect the supply chain inventory and pricing decisions.According to the different types of supply chain contract, we study wholesale price contract and revenue sharing contract. We analyze the impact of the decision-maker’s fairness concerns on the optimal wholesale price of the manufacturer, the retailer’s optimal retail price, the optimal order quantity, and the supply chain member profits and system profits under three different cases of the only retailer, manufacturer fairness concerns and both fairness concerns. We also discuss the fairness concerns have an effect on the supply chain’s coordination, and give the numerical examples at the same time.