Study of Supplier-led Supply Chain Decision-Making Considered Fairness Concern

Abstract

In order to study the supply chain decision-making problem considering supplier dominance under the perspective of fairness concern. This paper constructs a supplier-led Stackelberg game model for three scenarios: suppliers with fairness concern preferences, retailers with fairness concern preferences, and risk-neutrality, and solves it by using backward induction, analysing the impact of fairness concerns on the decision-making behaviours and profits of chain members. The results show that the wholesale price is largest when the supplier has a fair concern preference, followed by the risk-neutral, retailer has a fair concern preference scenario; the relationship between the size of the supplier's production effort, the retailer's retail price, and the supplier's expected profit in the three scenarios is more complex and depends on the size of the stochastic output factor and the level of fair concern; furthermore, the retailer's expected profit is smallest when the retailer has a fair concern preference, followed by the risk-neutral, retailer has a fair concern preference scenario. In addition, the retailer's expected profit is smallest when the retailer has a fairness preference, followed by the risk-neutral, supplier-fairness concern scenario.