Coordination of Supply Chains involving Various Agents with Behavioral Preferences

In supply chain management, decision makers´ behavioral problem may result in the chain´s poor performance. In this paper, we investigate a supply chain consisting of one risk-neutral supplier and one reference-dependent and loss-averse retailer who faces a newsvendor problem with price-dependent demand, and provide the conditions in which revenue sharing contracts can coordinate the supply chain under expected profit criterion. We also propose an extended supply chain coordination definition, which considers the impact of agents´ behavioral preferences on supply chain performance and allows the existence of agents with incomparable utilities. Furthermore, it generalizes the one in risk-neutral settings. Finally, we prove that the revenue sharing contracts can accomplish coordination of a newsvendor within the new framework