The Model Of A Supply Chain Network Based On Retailers' Long-term Regret Aversion

Regret often appears in daily life,and is closely linked with decisions made in life,understanding of life,and attitudes.The addition of Regret aversion theory will have a certain effect on the members of the network.This article mainly studies the consequences of this influence.Therefore,a model with three levels and market demand is uncertain is established.The model was added to consider the utility of regret avoidance.The regret-averse retailers will consider the negative effect of under-stock regret and over-stock regret.The optimal decision behaviors of manufactures,retailers considering the regret aversion and demand markets are modeled by the variational inequalities theory.Finally,the algorithm and numerical example are given to analyzed the influence of retailer's regret aversion on each decision maker and optimal value of the supply chain network.The main content and innovation points of this article are as follows:(1)In this paper,an equilibrium model of a closed-loop supply chain network with random demand is constructed.Base on the regret theory,the regret-averse retailers' utilities are analyzed.The equilibrium conditions of various decision makers and the network are established by the finite-dimensional variational inequality.Numerical examples are solved and the results show that regret-averse retailers increase their transactions but decrease their utilities,compared with regret-neutral retailers.The increase in the regret coefficient decreases manufacturers' profits and retailers' utilities.The weight of retailers' inventory and shortage regret affects their transactions,utilities and manufacturers' decisions,profits.(2)In this paper,we studied a dynamic equilibrium problem of a supply chain network,in which the demand is time-varying and random.For the uncertain and seasonal demand,the retailer will consider the negative effect of under-stock regret and over-stock regret,and make the optimal decision based on long-term regret aversion.Numerical examples are given in three long-term regret cases to find the effect of retailer's long-term regret aversion on the equilibrium order quantity,profit and utility.The results show that the equilibrium order quantity,the manufacturer's profit and the retailer's utility are different when the degree of retailer's regret aversion is in the increasing case,unchanging case,and decreasing case.These conclusions can provide suppose for the decision maker of the supply chain network to make the best decision considering the long-term regret aversion in the time-varying demand market.