An Order Allocation Model Of Logistics Service Supply Chain Based On Cumulative Prospect Theory

In the traditional study of supply chain order allocation or service supply chainorder allocation, the order allocation models are generally based on the rationaleconomic man assumption, and most of them are single period. These order allocationmodels neither considered the effect of behavior on the order allocation, norconsidered the condition of multi-period. And in the multi-period situation, the utilityof FLSPs not only relates to the quantity of the order allocation result of this period,but also linked with the changes of the quantity of the order allocation result betweenthis period and the last period. Therefore it is necessary to introduce behavioral theoryinto order allocation model, and exactly describes the decision-making behavior of themain body of supply chain in terms of risk, and it will be beneficial to obtain theresearch result with more theoretical reference value.This paper first analyses the basis and significance of the selected topic from thepractical and theoretical level, and points out that the lack of the study on providerbehavior research in the order allocation process. Second, This paper reviews theresearches on supply chain order allocation、multi-period supply chain、behavioraloperation management、the solving method of the supply chain order allocation aswell as supply chain competition, and points out the innovation and rationality ofstudy on the above questions based on prospect theory, and lays the foundation for thefull research work. Third, this paper separately discusses the issue of logistics servicesupply order allocation based on prospect theory、multi-period、competition, including:(1)This paper builds a comprehensive subjective utility(CSU) function of FLSP inmulti-period based on cumulative prospect theory, and establishes an order allocationmodel in multi-period logistics service supply chain. This model considers three goals:to minimize the cost of LSI, to maximize the satisfactory of FLSP.The method ofsolving the model is given and a numerical example is given by softwareMATLAB7.8, the effects of FLSPs’ behavior parameters on order allocation are alsodiscussed.(2)Traditional multi-objective function solving method has certaindrawbacks, therefore an improved technique for order performance by similarity toideal solution（TOPSIS）is given.(3) Considering that the order allocation process isalways happens in multi-period, therefore the period has extended from two to moreand also introduces a new objective which is to maximize the capacity matchingdegree among different logistics capacity.(4)The competition between providers are often appear order allocation process, therefore we also introduces competitionmechanism to the logistics service supply chain in the process of order allocation.Finally, the main conclusions and the prospect of future research are given.