Coordination of VMI Supply Chain with Loss Aversion and Replenishment Tactic
In today's globalized and highly competitive business environment,supply chain management has become a crucial factor for the success of enterprises.In this complex and dynamic network,supplier-managed inventory(VMI),supplier loss-avoidance behavior,and supplier replenishment strategies have emerged as significant factors influencing supply chain coordination and efficiency.Understanding and optimizing these aspects are paramount for enterprises to maintain a competitive edge in the market.Firstly,VMI,as a modern supply chain management model,has gradually garnered widespread attention from businesses over the past few decades.VMI involves suppliers proactively managing the inventory of their customers,facilitating information sharing and real-time responsiveness.This close collaboration not only aids in reducing inventory levels and increasing inventory turnover but also mitigates uncertainty within the supply chain.However,current research primarily focuses on the implementation and advantages of VMI,with limited exploration of the psychological factors and supplier behavior associated with VMI.Secondly,supplier loss-avoidance behavior is a crucial aspect influencing supply chain decisions.When faced with potential losses,enterprises often adopt measures to avoid them,aiming to minimize the likelihood of loss occurrence.This behavior in the supply chain may manifest risk aversion,sensitivity to losses,and impact on decision-making.However,research on the specific effects of supplier loss-avoidance behavior in supply chain management is still relatively scarce.Lastly,the replenishment strategy of suppliers is a key factor influencing inventory levels and supply chain flexibility.Effective replenish-ment strategies assist enterprises in better coping with market demand fluctuations,reducing stockouts,and enhancing customer satisfaction.However,within the context of VMI,the relationship between supplier replen-ishment strategies and coordination contracts,as well as their impact on supply chain performance,requires further an in-depth investigation.In conclusion,a comprehensive understanding of the relationships among supplier-managed inventory,supplier loss-avoidance behavior,and supplier replenishment strategies is crucial for optimizing supply chain coordination,reducing risks,and enhancing efficiency.Based on this,we then discuss the supplier's optimal inventory problem in a two-level VMI supply chain con-sisting of a single loss-averse supplier and a single risk-neutral retailer.In order to minimize losses from output shortfalls,the supplier chooses a replenishment strategy and employs a mental account separation method to charac-terize its loss aversion.The retailer,on the other hand,incentivizes the supplier to produce through contractual means to improve the overall operational efficiency of the supply chain,and the main contributions are as follows.First,supply chain coordination models under risk diversification contract,option contract and subsidy contract are established respectively,and it is found that all three contracts can coordinate the supply chain and achieve Pareto improvement.In other words,both parties in the supply chain can induce suppliers to produce from the perspective of risk sharing by adopting appropriate risk diversification contracts,option contracts and subsidy contracts,so as to improve the overall operational efficiency of the supply chain and achieve long-term good cooperation.Second,the above three types of contracts are compared and analyzed,and it is found that the performance of both parties to the transaction under the risk diversification contract is higher than that under other contracts.In other words,suppliers are more willing to adopt risk diversification contract to coordinate the supply chain.Finally,the impact of the degree of loss aversion on the Pareto improvement region of the above three types of contracts is discussed,which shows that suppliers will not choose option contracts and subsidy contracts once the degree of loss aversion they face is too large.The model setup in this paper is idealized and only considers the"one-to-one"case,and the next step will be to discuss the VMI supply chain coordination under the replenishment strategy adopted by multiple suppliers.In addition,this paper only considers the VMI supply chain problem based on replenishment and loss aversion behavior,and does not involve the promotional effort behavior of the trading participants,so the next step will also consider the VMI supply chain coordination problem when the loss aversion supplier adopts both sales effort and replenishment strategies.
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维普
