Behavioral study of supply chain coordination by contracts

Analyzing coordination contracts from behavioral aspects is one of the main research agenda of behavioral operations management (BOM). Herein, we design an experimental study to investigate the actual responses of agents in a supply chain model under wholesale-price and buyback contract. In a retailer game, it is observed that retailer’s behavior deviates from profit maximizing rational retailer. Furthermore, our results is inconsistent with prior researches showing retailers average orders are placed between profit maximizing order quantity and averagedemand. Lastly our study indicates loss aversion might not be a good explanation for the retailer behavior based on theexperimental design adopted in the literature.

Keywords:

Behavioral Operations Management (BOM) , Supply chain coordination , Wholesale-price contract , Buyback contract , Retailer game.