IDEAS home Printed from https://ideas.repec.org/a/pal/jorapm/v16y2017i4d10.1057_s41272-017-0094-0.html
   My bibliography  Save this article

Equilibrium analysis in multi-echelon supply chain with multi-dimensional utilities of inertial players

Author

Listed:
  • Gajanan Panchal

    () (National University of Singapore)

  • Vipul Jain

    () (Victoria University of Wellington)

  • Naoufel Cheikhrouhou

    () (University of Applied Sciences Western Switzerland HES-SO)

  • Matthias Gurtner

    (Ecole Polytechnique Fédérale de Lausanne)

Abstract

In a supply chain, the importance of information elicitation from the supply chain players is vital to design supply chain network. The rationality and self-centredness of these players causes the information asymmetry in the supply chain and thus situation of conflict and non-participation of the players in the network design process. In such situations, it is required to analyse the supply chain players’ behaviour in order to explore potential for coordination through incentives. In this paper, a novel approach of social utility analysis is proposed to elicit the information for supply chain coordination among the supply chain players in a dyadic relationship – supplier and buyer. In principal, we consider a monopsony situation where buyer is a dominant player. With the objective of maximizing the social utility, efforts have been made to value behavioural issues in supply chain. On the other hand, the reluctance of player due to the information asymmetry is measured in the form of inertia – an offset to the supply chain profit. The suppliers’ behaviour is analysed with three distinct level of risk for two types of the product in procurement process. The useful insight from this paper is in supplier selection process where the reluctance of supplier offsets supply chain profit. The paper provides recommendations to supply chain managers for efficient decision-making ability in supplier selection process.

Suggested Citation

  • Gajanan Panchal & Vipul Jain & Naoufel Cheikhrouhou & Matthias Gurtner, 2017. "Equilibrium analysis in multi-echelon supply chain with multi-dimensional utilities of inertial players," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 16(4), pages 417-436, August.
  • Handle: RePEc:pal:jorapm:v:16:y:2017:i:4:d:10.1057_s41272-017-0094-0
    DOI: 10.1057/s41272-017-0094-0
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1057/s41272-017-0094-0
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Gérard P. Cachon & Robert Swinney, 2009. "Purchasing, Pricing, and Quick Response in the Presence of Strategic Consumers," Management Science, INFORMS, vol. 55(3), pages 497-511, March.
    2. Joel Watson, 2007. "Contract, Mechanism Design, and Technological Detail," Econometrica, Econometric Society, vol. 75(1), pages 55-81, January.
    3. Gajanan Panchal & Vipul Jain, 2011. "A review on select models for supply chain formation," International Journal of Business Performance and Supply Chain Modelling, Inderscience Enterprises Ltd, vol. 3(2), pages 113-123.
    4. Yeon-Koo Che, 1993. "Design Competition through Multidimensional Auctions," RAND Journal of Economics, The RAND Corporation, vol. 24(4), pages 668-680, Winter.
    5. Mas-Colell, Andreu & Whinston, Michael D. & Green, Jerry R., 1995. "Microeconomic Theory," OUP Catalogue, Oxford University Press, number 9780195102680.
    6. Perrone, G. & Roma, P. & Lo Nigro, G., 2010. "Designing multi-attribute auctions for engineering services procurement in new product development in the automotive context," International Journal of Production Economics, Elsevier, vol. 124(1), pages 20-31, March.
    7. David C. Parkes & Jayant Kalagnanam, 2005. "Models for Iterative Multiattribute Procurement Auctions," Management Science, INFORMS, vol. 51(3), pages 435-451, March.
    8. Wang, Hong, 2013. "Contingent payment auction mechanism in multidimensional procurement auctions," European Journal of Operational Research, Elsevier, vol. 224(2), pages 404-413.
    9. Benjamin F. Hobbs & J. S. Pang, 2007. "Nash-Cournot Equilibria in Electric Power Markets with Piecewise Linear Demand Functions and Joint Constraints," Operations Research, INFORMS, vol. 55(1), pages 113-127, February.
    10. Jain, Vipul & Panchal, Gajanan B. & Kumar, Sameer, 2014. "Universal supplier selection via multi-dimensional auction mechanisms for two-way competition in oligopoly market of supply chain," Omega, Elsevier, vol. 47(C), pages 127-137.
    11. Peter R. Wurman & Michael P. Wellman, 1999. "Equilibrium Prices in Bundle Auctions," Working Papers 99-09-064, Santa Fe Institute.
    12. Damian R. Beil & Lawrence M. Wein, 2003. "An Inverse-Optimization-Based Auction Mechanism to Support a Multiattribute RFQ Process," Management Science, INFORMS, vol. 49(11), pages 1529-1545, November.
    13. Wei-yu Kevin Chiang & Dilip Chhajed & James D. Hess, 2003. "Direct Marketing, Indirect Profits: A Strategic Analysis of Dual-Channel Supply-Chain Design," Management Science, INFORMS, vol. 49(1), pages 1-20, January.
    14. Konstantin Kogan & Charles S. Tapiero, 2007. "Supply Chain Games: Operations Management And Risk Valuation," International Series in Operations Research and Management Science, Springer, number 978-0-387-72776-9, December.
    15. Jain, Vipul & Deshmukh, S.G., 2009. "Dynamic supply chain modeling using a new fuzzy hybrid negotiation mechanism," International Journal of Production Economics, Elsevier, vol. 122(1), pages 319-328, November.
    16. Qiaohai (Joice) Hu & Leroy B. Schwarz & Nelson A. Uhan, 2012. "The Impact of Group Purchasing Organizations on Healthcare-Product Supply Chains," Manufacturing & Service Operations Management, INFORMS, vol. 14(1), pages 7-23, January.
    17. Weber, Charles A. & Current, John R. & Desai, Anand, 1998. "Non-cooperative negotiation strategies for vendor selection," European Journal of Operational Research, Elsevier, vol. 108(1), pages 208-223, July.
    18. Yuri Levin & Jeff McGill & Mikhail Nediak, 2009. "Dynamic Pricing in the Presence of Strategic Consumers and Oligopolistic Competition," Management Science, INFORMS, vol. 55(1), pages 32-46, January.
    19. Zhao, Li & Tian, Peng & Xiangyong Li, 2012. "Dynamic pricing in the presence of consumer inertia," Omega, Elsevier, vol. 40(2), pages 137-148, April.
    20. Wellman, Michael P. & Walsh, William E. & Wurman, Peter R. & MacKie-Mason, Jeffrey K., 2001. "Auction Protocols for Decentralized Scheduling," Games and Economic Behavior, Elsevier, vol. 35(1-2), pages 271-303, April.
    Full references (including those not matched with items on IDEAS)

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pal:jorapm:v:16:y:2017:i:4:d:10.1057_s41272-017-0094-0. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sonal Shukla) or (Springer Nature Abstracting and Indexing). General contact details of provider: http://www.palgrave.com .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.