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The Influence Analysis of Number of Functional Logistics Service Providers on Quality Supervision Game in LSSC with Compensation Strategy

Author

Listed:
  • Weihua Liu
  • Yijia Wang
  • Zhicheng Liang
  • Xiaoyan Liu

Abstract

There is a close link between the number of suppliers and the quality of products including service. However, there is a research gap in this field. Particularly, the problem whether this link would be affected by different supply chain profit distribution policies is lack of in‐depth research. In this paper, a basic game model for quality supervision game without FLSPs’ competition (Model I) in a logistics service supply chain (LSSC) is established first. Model I adopts a mixed payment contract and is composed of a logistics service integrator (LSI) and functional logistics service provider (FLSP). The mixed‐strategy Nash equilibrium of Model I is presented. Model II considering competition among FLSPs is then built based on Model I, and the new mixed‐strategy Nash equilibrium is provided. Results show that under competition the ordinary mixed payment contract cannot make quality supervision game parameters all optimized. Therefore, Model III under a compensation mechanism is established based on Model II, and the range of the compensation value is calculated. Furthermore, we propose three kinds of concrete compensation mechanisms, which are fixed, linear, and nonlinear compensation mechanism. And the optimal compensation mechanism for a LSI with different numbers of FLSPs is provided.

Suggested Citation

  • Weihua Liu & Yijia Wang & Zhicheng Liang & Xiaoyan Liu, 2014. "The Influence Analysis of Number of Functional Logistics Service Providers on Quality Supervision Game in LSSC with Compensation Strategy," Abstract and Applied Analysis, John Wiley & Sons, vol. 2014(1).
    • Handle: RePEc:wly:jnlaaa:v:2014:y:2014:i:1:n:956569
    DOI: 10.1155/2014/956569
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    References listed on IDEAS

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